Abstract:
Cooperatives enable people to improve their social and economic conditions by pooling their
resource and efforts together in ways that are more productive than working individually. The
aim of this study was to assess financial performance and determinants to performance of
multipurpose agricultural cooperatives. Multistage sampling was employed to select sample
households. Primary data were collected from 122 members of sample cooperatives those were
selected using simple random sampling proportional to size, through semi-structured interview
schedule. Moreover, secondary data was obtained from audit reports of sample cooperatives.
The collected data entered to SPSS version 20. Ratio analysis was used to assess financial
performance. Descriptive analysis such as mean, and percentage were analyzed along with
probit model. The result of ratio analysis revealed that most of the cooperatives were not solvent.
Financial performances with regard to activity ratio and profitability ratios fluctuation between
lower figures of positive values were observed in all cooperatives. As a result, most of the
cooperatives in the study area were performing their business inefficiently. However, their
moderate involvement in input distribution cooperatives output marketing service in the study
area was found as it was not outstanding. The model result revealed that family size, numbers of
shareholding, membership to union, working relationship; cooperative age and degree of
corruption were found to be determinants to members’ satisfaction to overall performance of
multipurpose agricultural cooperatives. Shortage of financial capital, lack of trained man power,
absence of regular auditing and reporting, lack of integrated and effective management,
inadequate supply of basic consumer goods, low participation of members and inaccessibility of
road infrastructures are key challenges constraining performance of MPACs. It is desirable to;
strengthen linkage with cooperative union, improve governance of cooperatives and conduct
further studies so as to enhance sound performance and development of cooperatives.
