Abstract:

This study looks al household savings behavior in relation to participation in SACCOS. A
participant was defined as one who made the decision to join a SACCO. Participants
were further disaggregated into those who save in the SACCO and those who do not hold
deposits in the SACCO. The analysis involved a descriptive analysis of households by
status of participation in the SACCO to determine whether there were significant
differences in the socio-economic characteristics of participants and non-participants. The
analysis then looked at the determinants of the degree of SACCO participation: none
membership, membership without savings and membership with savings using an
ordered probit model. For households with deposits in the SACCO, we used weighted
least squares (WLS) to determine the factors influencing the levels of deposits made in
the SACCO.
Results of the probit model analysis showed that the likelihood of membership and
depositing in a SACCO increased with growth in incomes, a move from a rural to urban
location and having dependants in secondary schools. Households with stable income
sources; salary, rent and a spouse who earns were however, less likely to join and save in
a SACCO.
The WLS analysis showed that deposits in the S/XCCO significantly decreased with
distance to the district capital, Net deposits also decreased with the increase in level of
education of the respondent, wealth holdings, for households engaged in trade and those
with secondary school dependants. This may indicate that SACCOS are not well suited to
such households either in terms of prestige or adequacy and suitability of products and
services offered, with such households graduating to saving with bigger institutions. The
analysis also showed a higher propensity to save out of transitory income than permanent
income.