Mburu Munyambu Zachariah^1,, Esther Gicheru¹, Lucy Ngare¹, Denis Kamau Muthoni²

Background: The dairy sub-sector is instrumental in the economy, as it contributes to the establishment of employment, food security, household incomes, and rural development. Dairy cooperative societies constitute the foundation of milk aggregation, processing, and marketing within the nation. A growing number of these cooperatives are encountering challenges to their financial sustainability, which threatens their long-term viability. This study emphasizes internal governance, namely the financial literacy of management committees, as a determinant of sustainable finance, contrasting with prior studies that concentrated on external market determinants and operational inefficiencies. Methodology: The study was anchored on the planned behaviour theory and employed an explanatory research design. The target population consisted of 216 registered daily cooperatives selected from 11 counties in Kenya, and a sample of 140 was selected through stratified sampling. Structured questionnaires were used to collect primary data. Findings: The study found that the management committee's financial literacy was positively related to the sustainable financing of the cooperatives. The study concluded that the committee's financial literacy enhances the management’s ability to make informed financial decisions, thereby fostering financial sustainability. Recommendations:The study suggests that when choosing and preparing members of management committees, dairy cooperative societies should give financial literacy first priority. Committee members should get standardized training in budgeting, financial analysis, debt management, and regulatory compliance from government organizations, SACCO regulatory authorities, and cooperative unions. Furthermore, policy frameworks must to be reinforced to mandate a minimum level of financial proficiency for those holding important positions in cooperative societies that involve financial decision-making.

Financial literacy, Sustainable financing, Management committee, Dairy Cooperative Societies, Financial Sustainability