Assessment Model Measuring Key Success Factors in Co-operative Financial Institutions to Improve Penetration Rate

Research purpose: This study aims to determine the reasons for the low penetration rate of the South African co-operative financial institution (CFI) sector; and to recommend a valid and reliable tool for assessing key success factors of CFIs. Little research has previously been undertaken on why the South African CFI sector remains small, with a penetration rate of just 0.1%. Research design, approach and method: This study used a quantitative design to evaluate objective data. A structured questionnaire was used to collect data from 303 consumers around Tshwane, and from 20 registered CFI representatives around the country. The SPSS software was used to analyse the data. Main findings: The study revealed that the low penetration rate of the CFI sector is due to consumers’ lack of knowledge about them, their products and activities. An assessment model has been proposed to help address the issue. Practical implication: The assessment model could be a useful tool for CFIs and other micro-credit lenders, as it aims to assist in measuring the effectiveness of their innovation and entrepreneurial strategies and then to initiate the necessary steps and training programmes to address the problem. Original value: The study findings provide empirical evidence on possible reasons for the low penetration rate of South African CFIs; and the proposed assessment model may help to improve membership growth and performance in the sector; particularly as no prior study has been conducted to determine the possible reasons for such a low penetration rate of SA co-operative financial institutions.