Application of financial management in co-operatives: experience from the field

Abstract

This study examined application of financial management in co-operatives. Specifically, the study intended to examine whether co-operatives adhere to financial management tools and to examine the challenges facing co-operatives in applying financial management. The study was conducted in Kilimanjaro, Arusha and Kagera regions. Both primary and secondary data were collected. Primary data were collected through interviews and secondary data through documentary review. Findings revealed that co-operatives were found to comply less with financial management tools. The tools tested include internal control, record keeping, accounting system, budgeting, audit, financial accountability, business plan and finance plan, cash flow management and understanding of costing. On the other hand, lack of skilled personnel in co-operatives, fraud practices by management and board, Low level of education of board members, low members’ involvement or participation were found to be among the factors which hinder application of financial management in co-operatives. The study recommends for co-operatives to regularly organize financial management training for the management and board members. This will improve the level of supervision and monitoring of financial management tools in co-operatives. Furthermore, co-operative laws should stipulate heavy punishment for fraud since fraud has been a regular practice in co-operatives. Regarding low level of member’s participation, co-operatives should regularly provide training to its members to enhance their understanding of co-operative operations and their position in decision making.