Abstract:
This paper explores capital budgeting processes in SACCOS. Nine SACCOS from Dar es Salaam and
Kilimanjaro were studied. SACCOS in the sample had different ranging from those with less than 500
to those with more than 4,000 members. Both questionnaires and interviews were used in collecting
primary and secondary data. The findings reveal that SACCOS' management and board members
make capital budgeting decisions. Major capital projects undertaken by SACCOS include office
building construction, acquisition office equipment and application software, purchase of furniture
and safes, and to a lesser extent, purchase of long term financial assets. It was learnt that some
SACCOS had committed huge sums of money to acquire tangible fixed assets such as construction of
costly buildings instead of using part of those hinds to acquire profitable and liquid-generating
financial securities available in financial markets. This seems to be contrary to financial speculations
which would have predicted the loan portfolio size to be the most influencing factor. The supremacy
of membership factor is consistent with the cooperative theory that, cooperatives member
consideration takes precedence over financial consideration in cooperative decision making.
