The effect of corporate governance on saving and credit cooperative unions financial sustainability; The case oromia national regional state of ethiopia

The main objectives of this study was to analyze the effect of corporate governance on financial sustainability of SACCO Unions in Oromia national regional state of Ethiopia. The Gender Composition of Management Committee, Controlling Committee Role, Management Committee Size, measured the effect of corporate governance, on financial sustainability and Management committee independence, financial sustainability of the SACCO Unions was analyzed using multiple regression. From A sample 225 primary Sacco’s was drown from Eight Unions having started their operation before 2008. The investigation and data collected was analyzed using descriptive statistics and multiple regression model to evaluate the effect of independent variables on dependent variable using SPSS 24 version. The study had shown weak corporate governance in Sacco Unions. Sacco’s management committee elected by the general assembly to lead the unions without any knowledge of financial and cooperative leadership skill. There is no separate enforcing financial and operational regulation to guide the unions to apply cooperative laws to practice the Corporate Governance Functions (indicators) in the region at all. There is no role difference of management committee and hired management of the unions. Limited number of women in leadership, weak supervision of control committee. Most unions Management committees are dependent on chief officers (managers and employees) of the unions. As a result, the sustainability status of the SACCO unions in the region indicates 48% only. While the rest 52% of them are in danger to failure. By this study, we recommend that the least performing SACCO Unions should apply the corporate governance principles and try to design strategies to include educated, youth and women leaders, capacitate controlling (control) committees to check and balance the activities of both management committee and managers from dependence on external

funds and fraudulent actions that harms the sustainability of the unions. The region needs to have strong financial and operational regulations for saving and credit cooperative to apply corporate governance principles and values accordingly.