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.