Abstract:
Savings and Credit Cooperative Societies as financial intermediates provide financial services
that connect lenders and borrowers within a society. In order to meet demands of suppliers and
users of funds they embark on provision of savings and lending services on a continuous and
sustainable basis. They however face difficulties that are related to their inability to match the
maturity of assets and liabilities. This aspect assets- liability management is also an attribute of
the way these societies treat assets and liabilities. They assume liabilities such as savings and
deposits are not interest sensitive and thus do not react to changes in the market interest rates. On
the other hand, assets such as members ' loans are not designed to match to maturity of relata
obligations. There is a mismatch in both interest rate sensitivity and duration. As a result of these
inhibiting factors, SACCOS experience liquidity problems in meeting members' loan
applications and funding of viable agricultural and investment requirements.
This paper examines the current difficulties in financing of loans and proposes how a better
management of the assets and liabilities could reduce the gap that exists in their maturity. It further
recommends application of an inter-lending approach amongst the SACCOS as a way of
alleviating temporary cash shortages as well as an opportunity for investment of short-term
surplus cash. For large borrowers, the paper advocates undertaking of syndication activities in
which or more societies could together finance a single borrower. Syndication could help in
financing of agricultural marketing and other investments of intermediate and long-term duration.
This way savings and credit cooperatives core values of self-help, access, trust and growth can be attained.
