Risk Management, Regulatory Compliance, and Socially Sustainable Financial Inclusion: The Moderating Role of Technology Implementation in SACCOs-Evidence From Greater Bushenyi District, Uganda
DOI:
https://doi.org/10.51137/wrp.ijsbe.806Keywords:
SACCOs, Risk Management, Regulatory Compliance, Technology Implementation, Social Sustainability, Financial InclusionAbstract
This study investigated whether technology implementation moderates the relationship between risk management, regulatory compliance, and financial sustainability in Savings and Credit Cooperative Organizations in Uganda’s Greater Bushenyi District. In a social sustainability framework, financial inclusion is viewed as a critical tool for attaining fair resource access and long-term community resilience. A quantitative study was undertaken with 251 respondents from SACCO branches in the Greater Bushenyi District. SmartPLS-SEM software was used to analyze data in the Resource-Based View (RBV) paradigm, testing both direct and moderating effects. The findings revealed that risk management influences financial sustainability (β = 0.286, p < 0.001), and regulatory compliance was found to have no direct influence (β = 0.079, p = 0.209). Technology implementation was found to be insignificant on the risk management sustainability relationship (β = -0.145, p = 0.036), suggesting that it weakens rather than strengthens the relationship. Also, technology did not significantly impact the relationship between compliance and sustainability (β = 0.076, p = 0.265). This is one of the first studies to reveal a negative moderating effect of technology on the risk management-sustainability relationship in rural SACCOs, calling into question the idea that technology always improves governance capacities and emphasizing the importance of the implementation environment. This research connects SACCO operations to broader social sustainability goals by showing how risk management and compliance, when supported by technology, enhance financial inclusion as a mechanism for socially sustainable development.
References
Abbey, N. L. (2024). The Impact of Risk Management on the Financial Performance of Kyamuhunga Peoples Sacco: A Case Study in Bushenyi District. Uganda Christian University. https://scholar.ucu.ac.ug/items/255b50a5-768a-408a-807c-6436368d454d
Adams, A., & Tewari, D. D. (2020). Impact of regulation on microfinance institutions sustainability and outreach in sub-Saharan Africa. In African Journal of Business and Economic Research (Vol. 15, Number 3, pp. 11–34). Adonis and Abbey Publishers Ltd. https://doi.org/10.31920/1750-4562/2020/V15N3A1
Agyemang, O.S. A., & B., C. (2022). Compliance costs and MFI performance in Sub-Saharan Africa. Journal of African Business, 23(4): 456-473
Anyanzwa, J. (2026). Uganda to compensate victims of collapsed Saccos. The EastAfrican. https://www.theeastafrican.co.ke/tea/business-tech
Banda, N., Matafwali, B., & Mwange, A. (2025). Regulatory Frameworks for Village Banking and Financial Inclusion: Comparative Lessons from Africa, South Asia, and the Middle East. East African Finance Journal, 4(1), 76–97. https://doi.org/10.59413/eafj/v4.i1.5
Bank of Uganda. (2023). Annual microfinance sector performance report. Kampala, Uganda: Bank of Uganda Publications.
Bank of Uganda. (2025). Annual Microfinance Sector Performance Report: Bank of Uganda Publications
Barney, J. (1991). Firm resources and sustainable competitive advantage. Journal of Management, 17(1), 99–120.
Bolton, M., & Mintrom, M. (2023). RegTech and creating public value: opportunities and challenges. Policy Design and Practice, 6(3), 266–282. https://doi.org/10.1080/25741292.2023.2213059
Chauhan, S. (2021). Social and Financial Efficiency: A Study of Indian Microfinance Institutions. IIM Kozhikode Society and Management Review, 10(1), 31–43. https://doi.org/10.1177/2277975220953311
Chen Y., & Lee H. (2021). Predictive risk management in microfinance. Journal of Financial Transformation, 53, 67–79
Cheung, G. W., Cooper-Thomas, H. D., Lau, R. S., & Wang, L. C. (2024). Reporting PLS-SEM results in management research: A practical guide. Journal of Management, 50(2), 1-34.
Chikalipah, S. (2017). Financial sustainability of microfinance institutions in sub-Saharan Africa: Evidence from GMM estimates. Enterprise Development and Microfinance, 28(3), 182–199. https://doi.org/10.3362/1755-1986.16-00023
Churchill, R. Q. (2016). Evaluating the credit risk management practices of microfinance institutions in Ghana: Evidence from Capital Line Investment Ltd. and Dream Finance Ltd. Archives of Business Research, 4 (5). https://doi.org/10.14738/abr.45.2216
Cooper, B., Rusare, M., Van Der Linden, A., & Ferreira, M. (2018). Biometrics and financial inclusion. www.cenfri.org
CRBA. (2025). Building trust and driving financial inclusion through data in Uganda. Credit Reference Bureau Association. https://www.crbassociation.com/
De Michele, C., & De Bartolo, S. (2025). Skewness and kurtosis in hydrological data analysis. Water Resources Research, 61(1), e2024WR037890.
Gupta, A., & Tham, T. M. (2024). RegTech in emerging markets: Technology in Society, 76, 102–118
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2022). A primer on partial least squares structural equation modeling (PLS-SEM) (3rd ed.). Sage.
Haji-Othman, Y., & Yusuff, M. S. S. (2022). Assessing composite reliability and average variance extracted in PLS-SEM. Journal of Modern Accounting and Auditing, 18(3), 145-156.
Illangakoon, A. G., Azam, S. M. F., & Jaharadak, A. A. (2021). Impact of Risk Management towards Sustainability of Microfinance Industry in Sri Lanka: A Case Study. International Journal of Social Sciences and Economic Review, 01–07. https://doi.org/10.36923/ijsser.v3i4.117
Isiyaku, S., Ayuba, H., & Sani, A. (2015). Normality assumptions in social science research: Guidelines for skewness and kurtosis. Nigerian Journal of Social Research, 12(2), 45-59.
Kamranfar, M., Azar, A., & Gholamian, M. (2023). Interpreting R-squared in PLS-SEM: Thresholds and applications. Journal of Business Analytics, 6(1), 78-92.
Kassim, S. & Rahman, M. (2020). Regulatory compliance and sustainability of MFIs. International Journal of Islamic and Middle Eastern Finance, 13(2), 245–262.Kazo fm (2026), Greater Bushenyi leaders call for good governance, management at IGABU. https://kazofm.com/2026/
Kazo FM. (2026). Greater Bushenyi leaders call for good governance, management at IGABU. https://kazofm.com/2026/
Kraaijenbrink, J., Spender, J.C., & Groen, A. J. (2010). The resource-based view: A review and assessment of its critiques. Journal of Management, 36(1), 349–372.
Kumar, N., & Rao, P. (2022). Financial inclusion through MFIs. World Development, 150, 105–120.
Kwak, S. K. (2023). Understanding p-values and statistical significance in business research. Korean Journal of Business Administration, 36(2), 221-235.
Lee, H., & Shin, S. (2019). Technology and MFI Efficiency. Electronic Commerce Research, 19(3), 567–589.
Liang, T. P., You, J. J., & Liu, C. C. (2010). A resource-based perspective on information technology and firm performance: A meta analysis. Industrial Management and Data Systems, 110(8), 1138–1158. https://doi.org/10.1108/02635571011077807
Lin, Y., & Wu, L. (2022). Resource complementarity and firm performance. Strategic Management Journal, 43(5), 987–1006.
Malik, M., Sorte, S., Ajani, S. N., Ansari, A., Shakya, A., & Wawage, P. (2025). Mapping Portfolio-Level Risk Contingency Frameworks for Microfinance Institutions Facing Sectoral Shocks. In Enterprise Development and Microfinance (Vol. 35, Number 2).
Marimira, N., & Gumel, B. I. (2025). The Effect of Liquidity Risk on Operational Efficiency: A Study of Some Micro-financial Institutions within Sub-Saharan Region. Asian Journal of Economics, Business and Accounting, 25(4), 558–576. https://doi.org/10.9734/ajeba/2025/v25i41771
Mbogo, M. (2026). How SACCO leaders persuaded Museveni on BoU crackdown. Uganda Bulletin. https://www.ugbulletin.co.ug/
Meagher, P. (2002). Microfinance Regulation in Developing Countries: A Comparative Review of Current Practice
Mersland, R., & Strøm, R. (2020). Microfinance institutions: Financial and social performance. Journal of Banking & Finance, 113, 105–118.
Moreno-Menéndez, F. M., González-Prida, V., Pariona-Amaya, D., Zacarías-Rodríguez, V. E., Zacarías-Vallejos, V., Zacarías-Vallejos, S. R., Aguilar-Cuevas, L. A., & Campos-Carpena, L. P. (2025). Improving Financial Sustainability Through Effective Credit Risk Management and Human Talent Development in Microfinance Institutions. International Journal of Financial Studies, 13(2). https://doi.org/10.3390/ijfs13020060
Muruku, M., Miriti, S., Rael Nkatha, M., & Kingori, G. G. (2024). Moderating Effects of Extraneous Shocks on the Relationship Between Default Determinants and Agribusiness Loan Default Rate in Agricultural Finance Corporation, Mount Kenya Region. International Journal of Business and Risk Management, 5(1), 1–10. https://doi.org/10.12691/ijbrm-5-1-1
Musfiroh, A., Huda, N., & Rahmawati, D. (2025). PLS-SEM applications in moderating effect studies: A methodological review. Asian Journal of Business Research, 15(1), 45-62.
Mwangi, J., & Ouma, D. (2023). Mobile money and MFI efficiency in East Africa. Information Technology for Development, 29(1), 88–106.
Nair, R., & Meenakumari, J. (2023). Risk Management strategies for Sustainable Development in Information Technology. International Journal of Advances in Engineering and Management (IJAEM), 5, 179–192. https://doi.org/10.35629/5252-0511179192
Nakato, R., & Ssekakubo, J. (2022). Technology adoption barriers in rural Ugandan microfinance institutions. East African Journal of Business and Economics, 5(1), 34–49.
Njuguna, A & Mwangi, M (2019). Credit risk management and financial stability. African Journal of Finance and Management, 28(1), 56–72.
Ofori-Sasu, D. et al. (2021). Technology, governance, and sustainability of MFIS. Cogent Economics and Finance, 9(1), 191–209.
Otto, G. & Ukpere, W. (2021). Operational challenges of MFIs in sub-Saharan Africa. Journal of Economics and Behavioral Studies, 13(3), 22–35.
Priem, R. L.; Butler, J. E. (2001). Is the resource-based view a useful perspective for strategic management research? Academy of Management Review, 26(1), 22-40.
SmartPLS. (2024). PLS-SEM in SmartPLS. The gold standard for predictive SEM. SmartPLS Documentation. https://smartpls.com/documentation/stories/capabilities/smartpls-pls-sem
The East African (2026), Uganda to compensate victims of collapsed Saccos. https://www.theeastafrican.co.ke/tea/business-tech/uganda
Uganda Bankers Association (UBRA), (2023). District-level MFI performance dashboard. Kampala.
Wade, M. and Hulland, J. (2020). The resource-based view and information systems research. MIS Quarterly, 44(1): 1-25.
Wang, L., and He, J. (2022). Technology as a modulator of financial inclusion. Electronic Commerce Research, 22(3): 789-812.
Wanjiru, P., & Jagongo, A. (2022). Liquidity Risk and Financial Performance of Deposit Taking Savings and Credit Cooperative Societies in Kenya. International Journal of Finance and Accounting, 7(1), 1–14. https://doi.org/10.47604/ijfa.1465
Waryoba, P. B., & Masele, J. (2025). Perceived Influence of Digital Transformation on the Performance of Microfinance Institutions in Tanzania. Tanzania Journal of Development Studies, 22(2), 47–68. https://doi.org/10.56279/NJIY8787/TJDS.v22i2.3
Yousif, F., Berthe, E., & Maiyo, J. (2013.). UC Irvine White Papers Title Best Practices in Mobile Microfinance Publication Date 2013 Copyright Information. https://escholarship.org/uc/item/2g18k3vk
Zineelabidine, M., Nafssi, F., & Ayass, H. (2024). The Determinants of the Efficiency of Microfinance Institutions in Africa. Journal of Risk and Financial Management, 17(8). https://doi.org/10.3390/jrfm17080318
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Brian Sempebwa, Enock Maina, Namungo Hamzah (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
