1 / 8100%
Effect of personal savings on the income of SSDF and resource mobilization
Most SACCOs and financial institutions would want to establish the credit worthiness of an
individual before deciding on the amount to give to the individual in terms of loan. The
parameters used to measure the credit worthiness of the individuals are the amount of savings the
individuals have. The more the savings one has the more the loans that one is likely to obtain.
This simply means, those who are able to save more shall get more loans than those who do not
save, (Msemakweli, L., 2004).
The income not spent on consumption is defined as saving. Saving is the act of not consuming all
of one’s current income. Whatever is not consumed out of disposable income is by definition
saving. A tri-lateral relationship among savings, consumption, and income is the key determinant
of the amount of personal savings. On the first side, given a certain income, the decision to buy
goods and services (consumption) negatively affects savings. Savings passively adjust to
consumption and income. They represent a resource slack, buffering shocks in income and
consumption desires, (Msemakweli, L., 2004).
According to personal finance concept, saving means keeping or conserving money to be used in
future, whereby, usually the money is deposited, instead of investing it, where no factor is
always involved. Saving is done with some pre-determined investment objectives. In other
words, saving is the act of conserving cash for any purpose or for future usage. On the other
hand, savings means the cash saved to that very moment, (Msemakweli, L., 2004).
Duration of personal savings
Generally, the real meaning of saving is seeking to preserve assets that you accumulate over
time. For savers, stability of principal is a higher priority than return potential. A saver tends to
be risk averse and typically stores money in instruments such as savings and call accounts, which
facilities are offered by SACCOs and building societies. These types of low-risk vehicles
ordinarily offer relatively low potential for return, but the principal and interest are guaranteed.
While they may be suitable for your immediate and short-term liquidity needs, they are seldom
the best choices for accomplishing your long-term financial objectives, due to their modest
potential for returns, (Msemakweli, L., 2004).
Further, bear in mind that the modest return potential of many low-risk savings instruments
might not even keep pace with inflation. As the cost of living increases, you will need more
money to buy goods and services and meet your financial goals. Your money should have the
potential to grow faster than inflation if you are to gain ground achieving your long-term
financial objectives, (Kyamulesire, 2008).
Amounts of personal savings in the Rural SACCO
Saving and the rate of interest is one of the very important factors which exercises influence on
the volume of saving. If the rate of interest is high, it generally induces people to save more
money and if it is low, the saving is discouraged. However, there will of course be a few people
who will try to save more when the interest rate is low save less when the interest rate is high just
to provide for themselves a certain annual income for their old age or for their dependants. In
other terms, savings can arise from a compulsory tendency of renouncing and postponing even
balance consumption (greediness) or, instead, they can be the result of sharply rising income,
with higher consumption taking place meanwhile, (Kyamulesire, 2008).
Cumulated and invested personal savings give rise to personal wealth stock. Savings left in
SACCOs accounts are an important part of money. To the extent the SACCOs decide to finance
business investment with respect to the amount of deposits they received, an increase of personal
savings could foster investment by the established firms. If money deposited is converted in
subscription to equity in one's own firm, savings serve for personal careers and independence,
again with a possible link to investment in a macroeconomic sense, (Kyamulesire, 2008).
Invested in Treasury bonds, savings finance public expenditure. Invested in shares, they can
directly or indirectly finance the firms. Savings can also be transferred abroad by remittances,
giving rise to a new choice their between consumption and savings. Power to save depends upon
the level of income which a person earns. In case of a nation, power to save depends on proper
utilization of natural resources. It is because when the income is low, then almost the whole
amount is spent on meeting the bare necessities of life so saving is very nominal. But in case of
high income, one can save if he likes because he has got the surplus income over consumption,
(Kyamulesire, 2008).
Duration for personal savings in the Rural SACCO
People save money as a provision against some unforeseen circumstances which might arise in
the future. A few others accumulate wealth for their dependants and others save basically to
access credit. All these prudential considerations can be constituted under the heading foresight.
There is a significant difference between the terms "saving" and "savings". While the former
implies addition to the value of any asset, the latter represents a part of a particular asset. Hence,
"saving" is a flow concept and "savings", a stock concept, (Kyamulesire, 2008). The small scale
dairy farmers must save for a predetermined period of time in their Rural SACCOs before they
access credit.
Adedayo, (2005). ‘Dairy Sub-sector in Zambia: How can it be productive?’ Times of Zambia
29th July. Accessed on 14th March
Adera, 2005) . Assessing Community Health Programs: Participant's Manual And
Workbook.Uk: Teaching Aids At Low Cost. Journals And Publications
Ajibade, (2002). .A history Of The Uganda Cooperative Movement 1913-1988.Kampala:Uganda
Cooperative Alliance Ltd.
Bandiera, (2006). Integrated Development in Uganda: Kampala: Desk Top Publishing Division
Africa Development Series No.2 Vol .1.
Chambers, (2003) Adoption of innovations and best management practices among dairy farmers
in the Eastern Mediterranean region of Turkey’, Journal of Animal and Veterinary
Chamwada, (2012). Kampala: Uganda Institute of Saccosers.Vol.2.Issue 1, March.
Chapoto, (2011) How Joint Farming may solve Contradictions between Technological Level
and Farm structure in Norwegian Dairy Production’
Chrystal, (2005). Apractical Guide for undergraduate and postgraduate students. London:
Macmillan Press Ltd.
Coelli, (2005). ‘Social Networks and Technology Adoption in Northern Mozambique’, The
Economic Journal 116(514): 869-902.
De Soto, 2009. Central Statistics Office, (2006) Living Conditions Monitoring Survey. Lusaka,
Zambia: CSO.
Dwivedi (2006) Analysis of Variance Interpretation The social construction of analytical
systems: New directions in the analysis and research technology : 83-103.
FAO, (2010). ‘The Social Construction of Technological Systems: New Directions in the
Sociology and History of Technology’, MIT Press, Cambridge, MA.
Francis, (2010) , New Research methodology techniques Desk Top Publishing Division Africa
Development Series No.2 Vol .1.
Friedman, (2007). .Mobilising Household savings through Rural Financial markets. Ohio state
University: University of Chicago Press.
Haig-Simons, (2013). .Basic Econometrics 4thEdition.NewDelhi: Tata McGraw Hill.
Henry Simons. (2007) .Applying international best practices to South Africa's SACCOs:
Holmes, (2001). ‘An Analysis of Smallholder Farmers’ Willingness to Adopt Dairy Performance
Recording in Malawi’, Livestock Research for Rural Development 18(5).
IADP, (2007) Human Development through Credit Unions: Guide for Credit Union Promoters.
Nairobi, Kenya. Acosca.
Ijere, (1992). ‘The Social Construction of Technology: Structural Considerations’, Science,
Technology & Human Values 27(1): 28-52.
KARI, (2011). ‘Farmers’ Stepwise Adoption of Technological Packages: Evidence from the
Kenyan Cooperatives’, Cooperative Journal of Agricultural Economics: 519-527.
Katwa, (2009) ‘Dynamic Pathways into and out of Poverty: A case of Smallholder Farmers in
Kenya’, FSRP Working Paper No. 56
Ketty, (2011).Supporting Smes Development &The Role Of Micro Finance In Africa
Kothari, (2004) Sample Research Design and method s Research Teaching Aids At Low Cost.
Journals And Publications Nairobi University press 2001
Kupoluyi (2003), ‘Factors Affecting Adoption of Improved Maize Seeds and use of Inorganic
Fertilizer for Maize Production in the Intermediate and Lowland Zones of Tanzania’,
Journal of Agricultural and Applied Economics 32(1): 35-48.
Kyamulesire, (2008). ‘Milking the Region? South African Capital and Zambia’s Dairy Industry’,
African Sociological Review 12(2): 55-66
Mauri (2008), Micro-Finance Hand Book: An Institutional and Financial Perspective.
Washington D.C, World Saccos.
Mbugua, (2009). ‘Society in the Making: The Study of Technology as a Tool for Sociological
Analysis’, The social construction of technological systems: New directions in the
sociology and history of technology : 83-103.
Msemakweli, L., (2004). ‘Future of Livestock Industries in East and Southern Africa’,
proceedings of the Workshop Held at Soysambu Ranch, Kenya, 20-23 July
1992.International Livestock Centre for Africa (ILCA), Kenya
Mshaweji, (2012).Uganda Cooperative Alliance Today. Kampala:Uca/Crfs Unit
Mubi (2013), ‘Smallholder Dairy Systems in the Kenya Highlands: Cattle Population Dynamics
Under Increasing Intensification’, Livestock Production Science 82(2-3): 211-221.
Mugenda and Mugenda, (2003), Research and methodology Kenya Agricultural Research
Institute Accessed 12
April 2004 Kenyatta University Press. Nairobi NBI 122/11
Musinguzi,( 2000). The New Approach To Cooperative Development. Kampala: Uca/Crfs Unit.
Mwangi (2000). Savings habits, Needs and Priorities in Rural Kenya Usa: Usaid.
Mwangi, (2000). The East African Capital Markets Journal April 25, 2005.
Mwankemwa 2004). Cooperatives: Past, Present and Future. Kampala: Uganda Cooperative
Alliance Ltd. References
Mwesigye, R.Mwesigye, F., 2003.Cooperatives Take off in Ntungamo District. The New Vision,
Vol.18 No.50.
Ntungamo District Ngo Forum. , 1997.Directory Of Civil Society Organisation In Ntungamo
Nurkse, 2003),An Introduction To Positive Economics, 8th Edition. Oxford: Oxford University
Ofuoku et al., (2009)‘The increasing Importance of Quality Assurance to Smallholder Dairy
Farmers in East and West Africa:
Olatona, (2007) ‘Agricultural Technology Adoption and Poverty reduction: A propensity score
matching analysis for rural Bangladesh’, Food Policy 32 : 372-393, Elsevier
Olawepo, (2003). ‘Adoption of dairy technologies: Lessons learnt from Case Study in Western
Kenya’, Kenya Agricultural Research Institute Accessed 12
April 2011
Olayemi, (2001) Personal Finance, USA: Irwin Homewood.
Orodho (2004) Correlation, coding and sample design techniques Increasing Intensification’
analysis and research Science 82(2-3): 211-221.
Patton (2011) research design and their methodology US statistical Research Institute Accessed
April 2011 Nevada USA. Published dissertation, South Africa: De Mont fort
Ramesh, (2010) ‘Demythologizing Planned Intervention: An Actor Perspective’, Sociologia
Ruralis 29(34): 226-249.
Shanner, (2012);‘Understanding Technology Pathways among Vegetable Farmers: A Theoretical
Framework and Research Agenda’, The World Vegetable Centre
Speed, (2010). A mannual on Credit and Savings For The Poor of Developing Countries:
Developing Guidelines N0.1.Uk.Oxfam. A Report On Status Of Rural Savings And
Credit Cooperatives In Kenya, 1998. International Cooperative Alliance.
The Micro Finance Saccoser, 2001. Kampala: Uganda Institute of Saccosers.Vol.1.Issue 3,
The Micro Finance Saccoser, 2003. Kampala: Uganda Institute of Saccosers.Vol.3.Issue 1,
Students also viewed