Influence of co-operative characteristics on financial performance of Irish potato farmer co-operatives in northern and western province Rwanda

Abstract

Purpose - The purpose of this paper is to examine the influence of co-operative characteristics on the financial performance of Irish Potato Farmer Co-operatives (IPFCs) in Northern and Western Provinces, of Rwanda. Design/Methodology/Approach - The study employed a relational research design in cross sectional research. A purposive sampling technique was used in selecting 32 IPFCs out of 64 observations that complied with audited financial reports for the period 2018 and 2019 were the primary data used for the research. Key Informants Interviews (KIIs), and Focus Group Discussions (FGDs) were employed for data collection. Panel regression analysis was used as it is suitable to deal with fixed effects (FE) or random effects (RE) error components presented in the model. Findings - The paper results showed that liquidity, leverage, the number of employees, the value of total assets and the value of share capital are significant factors that contribute to financial performance measured in terms of Return on Assets (ROA) and Return on Equity (ROE). The paper also revealed a limited financial capacity for most IPFCs in the study area, challenging their growth. Research Limitation: Legal, political factors, technological and cultural factors influencing the performance of farmer co-operatives were not considered in this paper. Practical Implications - The recommendations will mainly assist IPFCs in achieving desired financial performance and provision of expected services to members. IPFCs are recommended to mobilise their members to increase their shareholding, to raise capital for their co-operatives and thus improve performance levels. Social Implication: This paper generates facts to inform stakeholders such as policymakers and non-governmental organizations. Originality/Value - This paper took a holistic perspective to cover all the co-operative-specific characteristics in the performance evaluation.