Effects of financial inclusion strategies on performance of occupational-based Sacco’s in kericho County, Kenya

Abstract

Savings and Credit Cooperatives play an instrumental role in providing financial services and access to individuals who are historically excluded from formal financial institutions. Financial inclusion has been identified as one of the key elements for occupational-based SACCOs to thrive in terms of increased market share, customer satisfaction and loyalty, and profitability. Financial inclusion also benefits vulnerable populations including youths, women, people living with disabilities, uneducated, and low-income households who have limited access to affordable financial services. Financial inclusion therefore consists of initiatives that actualize financing in these groups. This study set out to investigate how financial inclusion impacts the performance of occupational-based SACCOs located in Kericho County, Kenya. Four specific areas guided the research: the role of digital financial services, the impact of regulatory frameworks, the contribution of financial literacy programs, and the influence of credit facility diversification on SACCO performance. A descriptive research design was employed, targeting a total population of 82 SACCO members drawn from various professional backgrounds. Using a census approach, all members were included in the study sample. To gather data, structured questionnaires were developed and distributed physically using the drop-and-pick method, facilitated by two trained research assistants. The study ensured the accuracy and suitability of the instruments through content and construct validity assessments, while reliability was confirmed using Cronbach’s alpha coefficient. Data analysis was conducted using SPSS version 25, applying both descriptive methods such as percentage summaries and inferential techniques, including correlation and multiple regression analysis. Results were systematically organized and displayed in tabular form to support interpretation and reporting. The findings revealed that financial inclusion strategies; digital financial services, financial literacy programs, diversification of credit facilities and regulatory frameworks explained 60.5% (R² = 0.605) of the variation in SACCO performance in Kericho County, with the model being statistically significant (F = 25.263, p = 0.000). In addition, regression coefficient results showed that digital financial services (β = 0.265, p = 0.016), financial literacy programs (β = 0.479, p = 0.000), and diversification of credit facilities (β = 0.253, p = 0.000) had significant positive effects on SACCO performance. However, regulatory frameworks (β = 0.063, p = 0.602) showed no significant effect. These findings shows the importance of practical financial inclusion efforts in enhancing SACCO outcomes. The study concludes that performance is significantly influenced by digital tools, member education, and product variety. Regulatory improvements may enhance their relevance and effect. In view of these findings, the study recommends that SACCOs should invest in digital systems, member training, and product diversification while regulators align policies with SACCO realities.