SACCO union. Majority of respondents expressed lack of awareness is the major constraints for the developments of cooperatives. Weak Governance and leadership The concept of governance refers to the way of managing, the way of controlling the operations of an organization. Discussions with SACCOs’ management committees and members reveal several common characteristics. Unlike many financial institutions, SACCOs’ management and committees elected by general assembly on one man one vote cooperative principle (many of them are below the required educational status and their knowledge in management, finance and leadership skill is poor. Their commitment is poor due to lack of incentives and most of them have their own jobs (they serve on part-time). This constraints leads to poor internal control system, incompliance with SACCOs manual and regulations, weak leadership, poor participation of members, weak in transparency and information communication and poor in financial administration. It is agreed that the finding of Tezeta & Deribe (2012) revealed that there are no savings & internal control procedures in place. They lack from internal audit committee, no written audit policy and procedures. This is risky as it may encourage fraud within organization. Reconciliation of cashbook balances and actual cash in the safe is sometimes not done frequently. There is poor documentation of loans and other financial record. They added Some SACCOs lack a clear cut direction of where they are going, what they want to achieve or progress they are making towards their targets. They have no grass root structure to support effective delivery of services and supervision. They also lack in culture of using regular program reports to review direction. There are cases where loan-aging analysis is hardly practiced, there are no provision for loan write offs and losses. No guidelines exist as to what to do in cases where a member defaults in loan repayment. Where they exist they are inadequate to serve the purpose as to why it is intended.
78 Lack of office building and equipments In many community-based SACCOs operated in Addis Ababa, lack of permanent office and address is main constraints for poor communication with CPDS and other stakeholders. As per respondent response, most community-based SACCOs organized by poor/low income community. The financial capacity does not allow them to acquire office. Most of SACCO used woreda/kebele’s free office around their destiny. In addition, Employee - based SACCOs also get their office from the employer. Only strong SACCOs those having adequate capital base have their own office. Lack permanent address of SACCOs hinders the communication with the cooperative promotion sector and other stakeholders. Many CPDS officials are repeatedly complaining about this challenge. It is very difficult to create good relationship and communication without having a reliable office/address. Thus, SACCOs get in to the office problems to conduct of meetings, cash collection, to keep books, vouchers and other relevant documents in a safe place. Members and management
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- Summer '16
- Test, Cooperative, SACCOs, Credit Cooperatives, Financial Cooperatives