Analysis of cooperative finance on performance of Agri Co operatives in Bujumbura municipality, Burundi

Abstract

The growth of small scale farmers, who are the majority in Africa, is considered one of the most important pillars of economic growth. Therefore, for African countries to realize substantial and meaningful economic growth, small scale farmers should be put into consideration. Agricooperatives have been identified and considered as a tool by which development of a given community is realized. For this to be realized, the performance of these agri-cooperatives is crucial. Cooperative finance is one of the aspects that greatly affect the output and the performance of these cooperatives. The purpose of the study was to analyze the influence of cooperative finance on performance of Agri-cooperatives in Bujumbura municipality, Burundi. The research was guided by three specific objectives that were formulated to guide the study which are to establish the influence of membership equity on performance of Agri-cooperatives in Bujumbura Municipality Burundi, to assess the influence of retained surplus equity on performance of Agricooperatives in Bujumbura Municipality Burundi and to examine the influence of debt financing equity on performance of Agri-cooperatives in Bujumbura Municipality Burundi. The study employed pecking order, Merton risk model; and Trade off theory that were considered important to the study. Target population of the study were all accountants and managers of Agri cooperative societies in Bujumbura municipality. The study adopted descriptive research design involving all 76 respondents with questionnaires. The study undertook census whereby all the 76 respondents were involved in the study. Data was analyzed by use of descriptive statistics such as mean and standard deviation as well as by inferential statistics like regression and correlation. Analyzed data was presented through frequency tables and charts. Correlation analysis of the study indicated that there is a positive correlation between membership equity and the performance of agri-cooperative societies in Burundi (r=0.808, p=0.000). There was also a positive correlation between retained surplus equity and the performance of agri-cooperative societies in Burundi (r=0.742, p=0.000). Additionally, the study indicated that there is a positive correlation between lease financing equity and the performance of agri-cooperative societies in Burundi (r=0.669, p=0.000). A positive correlation between debt financing equity and the performance of agri-cooperative societies in Burundi was determined (r=0.762, p=0.000). The financing prototype or version that will be adopted by an organization hinges on the decision that will be made by the management of that organization, the geographical scope as well as the line of operations they engage in. Nevertheless, there is a need for the organization to ensure that ideal and optimal level of financing is considered so that an organizations are not completely financed by debt but a good debt and equity ratio.