Corporate governance and financial sustainability of savings and credit cooperatives (saccos) in Uganda: a case of the hunger project Saccos.

Abstract

The purpose of this study was to examine the effect of corporate governance on financial Sustainability of SACCOs, with a view of addressing governance issues within THPU SACCOs. The study had three basic objectives; co examine the effect of Board Composition on financial sustainability of THPU SACCOs, to analyze the effect of Board Leadership on financial sustainability of THPU SACCOs and to assess the effect of Board size on the financial sustainability of THPU SACCOs. The researcher adopted a case study research design. To enable the researcher have an in-depth investigation into THPU SACCOs, the researcher involved multiple sources of data collection instruments including questionnaire, interviews and review of documents to allow triangulation of findings. The population size was the management scaff and the BODs of THPU SACCOs. The investigation revealed a high degree of correlation between Board Composition and financial sustainability, with a correlation coefficient of 0. 721 and a positive significance level of 0.000. The study further revealed that 52.1 % of financial sustainability can be explained by Board Composition. The investigation funher indicated that Board Leadership has a correlation of0.329 with a significant level of0.008 and a variance of 10.8%, meaning that only 10.8% of financial sustainability can be explained by Board leadership. Board size however, indicated a weak correlation of 0.225 with an insignificant value of 0.071, implying that,financial sustainability of TH PU SACCOs cannot be explained by the size of the Board. The study re<:ommended that SACCOs should appoint more outside directors, emphasize effective use of sub committtees, design a policy that attracts the young blood on Board and hire experienced managers with knowledge and skills. The study further recommended that, the attendance during Board meetings for all board members should be emphasized. Lastly, the study recommended an optimal Board size. This will enable SACCOs improve their performance and eventually achieve their objective of financial sustainability. Key words: Corporate governance , Financial sustainability, Savings and credit cooperatives , Board composition, Board leadership and Board size.