LIBRAE
5.8 Conclusion
There is no doubt that the current research will be of great value to SASCCO and its member societies. Solutions are suggested to the prevailing problems, which should result in a sustainable long-term relationship between SASCCO and its members. Appropriate application of the recommendations will increase the organization's productivity hence, its profit margins. The research has further explored several questions, which may have already been in the minds of the members, if the project is viable. The organization has been assessed and evaluated based on strategic and financial models. The Cooperative has the potential resource strengths, and strong competitive capabilities to run a suitable reorganization strategy that will succeed the organization.
Savings and Credit problems could be reduced if greater regulation and monitoring of the industry is conducted by the department of Agriculture and Cooperatives under the Commissioner's office.
Unambiguous Information concerning savings and credit should be readily available to all members. This could only be achieved if there is close monitoring or control of the credit and savings access. The government of Swaziland needs to institute consumer credit protection legislation. More consumer awareness and educational programmes should be encouraged to raise responsible borrowers and employees. Members need to be more informed about the advantages
and disadvantages of the use of credit in Cooperatives. Members should be in a position to determine what interest rates they are paying on their loans. Borrowers need to be informed of the dangers of taking too much debt and made responsible for their actions by including both the employers and the board members in deciding if a member should be granted a loan.
It is clear from the various studies of Cooperatives that the poor are able to pay interest and can save. This provides the reason that new forms of credit should be developed with more oriented goals to get rid of exploiter interest rates charges in the country and also as a means of out- performing money lenders charging unjustifiable interest rates. The duty of the state is to protect its citizens and enhance their well-being and to address the crucial issue of poverty in the country.
This implies that the Cooperative (SASCCO) has a greater challenge, of not losing the investors' confidence since the idea has only just taken-off in the industry. There is a great task for the mother Cooperative to educate its members against sourcing finance from other sources outside the Cooperative environment. Much will be expected from the Cooperative as an umbrella body.
The results obtained from the SWOT analysis, revealed that the Cooperative has more weaknesses inside than threats from outside. SASCCO lacks sufficient expertise for internal reorganization, which will make it difficult for the Cooperative to sustain a long-term return for its members' reserves. SASCCO is showing inability to devise tactical strategies for running daily operations.
It, therefore, follows that it may not be competent enough to recruit the right personnel in, logistics, marketing, research and development for its long-term sustainability. The Cooperative's technology was found to be below standard compared to that of its competitors in the industry. If the Cooperative is unable to meet the average standard set by the financial industry, the establishment of the Cooperative Bank may not be successful.
However, if the Cooperative is well reorganized it will recover from what might appear to be imminent disaster, and can offer tremendous investment returns. As a matter of fact, if its opportunities and strengths are appropriately utilized it will continue to survive as a going concern and sustain its long-term in the competitive business arena. A great opportunity for SASCCO exists to own the largest market share in the financial industry. The Reorganization strategy is, therefore, a suitable turnaround strategy to profit the cooperative. More than proportionate assets are financed by equity and the rate is increasing very fast. The results show that the Cooperative's balance sheet is very weak but the deficit could be reduced (though at a very slow pace), for
instance, by increasing members' shares, members' savings, reserves and profits. If this situation continues, the association's reserves will run dry. The Cooperative can only be able to reduce a significant amount or clear off this recurring deficit by committing more long-term debt into its capital structure. Debt is cheaper than equity as illustrated in Chapter Four and SASCCO can be able to enjoy tax benefits arising from reduced interests costs or tax shields from leased assets instead of acquiring them through outright purchase.
The financial results from the 2001 to 2003 reflect that the Cooperative is lowly geared. By introducing more secured debt in its capital structure, more benefits would be gained than using equity: interest payments are tax deductible, whereas dividends are not; floatation costs for debt (not leases) can be amortized over their life, while those of equity cannot be amortized; and debt is generally cheaper than equity. It should be noted, however, that ratio analysis is based on historical information which is subjective rather than objective. The figures calculated could be misleading in measuring value creation as they do not specifically take into account risk and time value of money. Accounting figures are subject to distortions and often do not give a true reflection of the company's current economic position. The balance sheet assets are reflected at historical costs not current replacement values. Consequently, if SASCCO were to value its assets with current replacement prices, efficiencies may be better or worse than reflected.
SASCCO could, further, be rated as a slightly more than one beta association, hence, has transited into a high volatile and risky fund. In turn, as compensation to investors, the Cooperative should be prepared to reward the members with higher returns than before. Such an effort should be manifested in the refining of policies and methods of productivity, creating specialist units and mechanisms to ensure improved quality of service, developing personnel specially suited to the present strategy, fostering individual and group commitment to the company mission and allocation of equitable resources among different strategic business units of the Cooperative.
Although the Cooperative is currently operating on an increasing level of deficit, the current reorganization strategy is suitable as has been tested. Right personnel should be put in place. There is a future for the Cooperative; its opportunities outweigh its weaknesses. SASCCO should pay serious attention on the raised issues; more so, introduce adequate long-term debt suitable for its capital structure. If serious measures are not undertaken on time, despite the fact of its enlightened CEO, the Cooperative would still be likely to fail and take a long time to recover.