| dc.description.abstract | The purpose of this research was to assess the effect of risk management on the financial
sustainability of SACCOs in Busia District. SACCOs in Busia District, Uganda, East Africa and
indeed the world over are struggling to be financially sustainable which can be partly attributed to
the frailties caused by constant exposure to numerous impactful risks.
This Study is based on comparative analysis of financial Sustainability of SACCOs that have
formal risk management structures within their operations and those that do not have risk
management engrained in their routine operations over a 5-year period of2014 to 20 18 by app lying
regression analysis.
The specific objective of the study was to investigate the effect of risk Assessment, control, and
Monitoring on the financial sustainability of SACCOs in Busia District. Risk Assessment had
dimensions such as; risk identification, analysis and Prioritization of all risks, Risk control
included risk planning and Risk response to the risks identified while Risk Monitoring included
continuous monitoring of risks. Current ratio and Return on Assets were used to analyze financial
sustainability. The study was carried out on 66 SACCOs randomly selected from the district with
respondents purposively selected due to the study knowledgeability selection criteria. The study
used both qualitative and quantitative methods of data collection. Physical administration of
questionnaires, structured interviews and financial data review was used to collect data. The data
was processed using SPSS 20. Correlation analysis was used to analyze the relationships between
the independent and dependent variables while regression analysis was used to analyze the degree
of variation in the dependent variable explained by the independent variable.
The study findings indicated that risk management had a positive effect on financial sustainability
of SACCOs in Busia District. The regression model used showed a good fit with an Adjusted R
square of 0.595. This depicts how impactful risk management is towards financial sustainability
of SACCOs.
The study also indicated that the major source of financial risks was the SACCOs receivables'
collection process, their credit policies and expansion plans. Ninety percent of SACCOs did not
depend on members' savings and loans only but rather expanded to other business ventures such
as fish vending, events management, shops and transport. These activities increased the SACCOs
exposure to risks which when not properly managed in the long run affected their financial
sustainability.
The study also revealed that SACCOs that fully embraced risk management had twice as much
more capacity to meet their financial obligations than those that did not have formal risk
management structures, sixty-seven percent of SACCOs sited cost and skill requirement as a
deterrent to forma l risk management.
The study concluded that, whereas risk management had a positive effect on financial
sustainability. the most crucial dimension in the process of risk management was risk control
which showed significant impact in the hierarchical regression analysis used in this study. How
well a SACCO responds to risks determined its long term survival, subsequently, the researcher
recommended that local governments recruit risk management officers at di strict level that can be
used as focal reference points by SACCOs including aiding the SACCOs' capacity build in terms
frisk management so that the costs for this practice in SACCOs is minimized. | en_US |
