Impacts of Rural Savings and Credits Cooperative Societies (Saccos’) Loans on Borrowers in Tanzania

Author(s)

Joseph John Magali ,

Download Full PDF Pages: 32-48 | Views: 380 | Downloads: 109 | DOI: 10.5281/zenodo.3441826

Volume 2 - December 2013 (12)

Abstract

This study applied the paired t-test and logistic regression analysis to assess the impacts of the rural SACCOS’ loans on borrowers in Tanzania where 431 borrowers from 37 rural SACCOS in Morogoro, Dodoma and Kilimanjaro regions were involved. The study noted that 73.5% of the rural SACCOS’ borrowers in Tanzania (P<0.01) realized the improvement of their livelihood on education and health, physical assets, crop yields and business capital. The study registered the increase of 50% to 200% of minimum and maximum value of the impacts variables after taking loans and the study noted that the high impacts of loans and low default rate for borrowers were positively related. This study recommends the following: borrowers should use credits risks mitigation techniques to reduce the amount of defaulted loans such as covering their business activities with insurance to minimize the credits risks, use loans according to the conditions stipulated in contracts, avoids multiple borrowing and the SACCOS should be keen in processing and followup of overdue loans. Moreover, the supervisory and regulatory role played by government of Tanzania to promote the rural SACCOS should be sustained. 

Keywords

Impacts, Rural SACCOS, Loans, Borrowers, Tanzania

References

         i.            Al- Mamun, A., Wahab, S. A., Malarvizhi, C. A.  and Mariapun, S. (2011). Examining the Critical  Factors Affecting the Repayment of Microcredit.  Provided by Amanah Ikhtiar Malaysia.  International Business Research Vol. 4, No. 2; April  2011.

       ii.            Bédécarrats, F., Baur, S. and Lapenu, C. (2011).  Combining social and financial performance: A  paradox? Global Microcredit Summit  Commissioned Workshop. Paper Presented on  November 14-17, 2011 – Valladolid, Spain.

 

      iii.            Bibi, A. (2006). Tanzania’s Cooperatives Look to  the Future. Retrieved on 20/12/2013, from: http://www.andrewbibby.com/pdf/Tanzania.pdf.

     iv.            Bichanga, W. O. and Aseyo, L. (2013). Causes of  Loan Default within Micro Finance Institutions in  Kenya. Interdisciplinary Journal of Contemporary  Research in Business. Vol 4, No 12, April 2013.

       v.            Brannen, C. (2010). An Impact Study of the Village  Savings and Loan Association (VSLA) Program in  Zanzibar, Tanzania. Unpublished Bachelor Thesis,  Wesleyan University. 

     vi.            Brau, J.C., Hiatt, S. and Woodworth, W. (2009).  Evaluating impacts of microfinance institutions  using Guatemalan data. Journal of Managerial  Finance, Vol. 35 No. 12, 2009, pp. 953-974,  Emerald Group Publishing Limited 0307-4358.

    vii.            Bwana, K. M. and Mwakujonga, J. (2013). Issues in  SACCOS Development in Kenya and Tanzania:  The Historical and Development Perspectives.  Developing Country Studies, Vol.3, No.5, 2013.

  viii.            Cambodia Institute of Development Study (CIDS n.d). Report Summary: Impact of Microfinance  Services in Cambodia. Retrieved on 05/12/2013,  from: http://cma 

     ix.            network.org/drupal/download/impact%20survey/Su mmary%20Report%20Final.pdf. Christopher, I.F. (n.d). Impact of Microfinance on  Small and Medium-Sized Enterprises in Nigeria presented in Proceedings of the 7th  International Conference on Innovation &  Management, pp 1864-1871.

       x.            Diagne, A. and Zeller, M. (2001). Access to Credit  and Its Impact on Welfare in Malawi. International  Food Policy Research Institute, Washington, D.C,  Research Report 116.

     xi.            Frohberg, K. and Müller, K.H. (2007). The Impact  of Microfinance on Rural Poor Households’ Income  and Vulnerability to Poverty: Case Study of  Makueni District, Kenya (Inaugural – Dissertation).  Rheinischen Friedrich-Wilhelms-Universität zu  Bonn.

    xii.            Ghalib, A. K. (2009). Measuring the Impact of  Microfinance Intervention: A Conceptual  Framework of Social Impact Assessment. Impact  Assessment Research Centre (IARC), University of  Manchester, IARC Working Papers Series No.  24/2009.

  xiii.            Girabi, F. and Mwakaje, A.E.G. (2013). Impact of Microfinance on Smallholder Farm Productivity in  Tanzania: The Case of Iramba District. Asian  Economic and Financial Review, 2013, 3(2):227- 242.

  xiv.            Gómez, R. and Santor, E. (2008). Does the  Microfinance Lending Model Actually Work? The  Whitehead Journal of Diplomacy and International  Relations, pp 37-55.

   xv.            Haque1, M. S., Akter, R. and Laoubi, K. (2011). Effectiveness of Community Based Organization  (CBO) Microcredit Programme of Concern  Worldwide: A Case Study of Bangladesh. African  Journal of Business Management Vol. 5(24), pp.  10101-10107, 14 October, 2011.

  xvi.            Jenkins, H.P. (n.d). The Impact of Regulation of  MFIs on Microlending in Senegal. Eastern  Mediterranean University, Turkey.

xvii.            Johnson, S. (2004). The Impact of Microfinance  Institutions in Local Financial Markets: A Case  Study from Kenya. Journal of International  Development J. Int. Dev. 16, 501–517.

xviii.            Kaboski, J.P. and Townsend, R.M. (2005).Policies  and Impact: An Analysis of Village-Level  Microfinance Institutions. Journal of the European  Economic Association, March 2005 3(1):1 50.

  xix.            Karlan, D. and Goldberg, N. (2007). Impact  Evaluation for Microfinance: Review of  Methodological Issues. Doing Impact Evaluation  No. 7, The World Bank.

   xx.            Kato, M. P. and Kratzer, J. (2013). Empowering  Women through Microfinance: Evidence from Tanzania. ACRN Journal of Entrepreneurship  Perspectives Vol. 2, Issue 1, p. 31-59, Feb. 2013.

 

  xxi.            Kessy, S. (2009). Microfinance and Enterprises  Performance in Tanzania: Does Gender Matter?  Repositioning African Business and Development  for the 21st Century, Proceedings of the 10th  Annual Conference.

xxii.            Kessy, S.S.A. and Urio, F.M. (2006). The  Contribution of Microfinance Institutions to Poverty  Reduction in Tanzania. REPOA Research Report  06.3. Mkuki na Nyota Publishers, Dar es Salaam,  Tanzania.

xxiii.            Kessy, S. and Temu, S.S. (2009). Impact on  Training on of Micro and Small Enterprises Served  by Microfinance Institutions in Tanzania: Research  Journal of Business Management.

xxiv.            Kihongo, R. M. (2005). Impact Assessment of  Village Community Bank (VICOBA), A Microfinance Project Ukonga Mazizini.  Unpublished MSc. Thesis. The Open University of  Tanzania & Southern New Hampshire University.

xxv.            Kushoka, I. (2013). Sustainability of an Employee  Based Savings and Credit Co-Operative Society: A  Case of Dar Es Salaam City Council SACCOS  Tanzania. American Based Research Journal,  Volume 2, Issue 7.

xxvi.            Kyessi, A. (2010). Access to housing finance by the  urban poor: The case of WAT-SACCOS in Dar es  Salaam, Tanzania. International Journal of Housing  Markets and Analysis, Vol. 3 No. 3, 2010, pp. 182- 202, Emerald Group Publishing Limited.

xxvii.            Kyeyune C. (2007). The Contribution of  Microfinance Institutions (MFIs) to the Economic  Activities of the Youth and Women in Luwero  District. A Case of FINCA Uganda. Unpublished  MBA Thesis, University of Makerere.

xxviii.            Lapenu, C. and Zeller, M. (2001). Distribution,  Growth and Performance of the Microfinance  Institutions in Africa, Asia and Latin America.  Discussion Paper No. 114, International Food  Policy Research Institute, Washington D.C.

xxix.            Lapenu, C. and Reboul, C. (2006). From social  strategy to impact: How can impact studies be  improved? CERISE, SPI3 - Discussion Paper No. 2,  Université de Paris 1, November 2006.

xxx.            Lau, L. (2008). Poverty and Sustainability Issues of  Microfinance in China: A Case Study in Fu’an,  Fujian Province. Working Paper No 25, Centre for  East and South-East Asian Studies Lund University,  Sweden.

xxxi.            Magali, J.J. (2013). Factors Affecting Credit  Default Risks For Rural Savings and Credits  Cooperative Societies (SACCOS) in Tanzania.  European Journal of Business and Management.

xxxii.            Maghimbi, S. (2010). Cooperatives in Tanzania  mainland: Revival and growth. CoopAFRICA  Working Paper No.14. Series on the status of  cooperative development in Africa. International  Labour Organization Office in Dar es Salaam,  Tanzania.

xxxiii.            Maximambali, F., Lwoga, C. and Rutherford, S.  (1999). Client Exits (Drop-outs) Amongst  Tanzanian Microfinance Institutions, Microsave,  Dar es Salaam, Tanzania.

xxxiv.            McGregor J, A. (1988). Credit and the rural poor:  the changing policy environment in Bangladesh.  Public Administration and Development 8: 467–82.

xxxv.            Ministry of Finance, Tanzania (MOFT 2012;2013).  Speech by the Minister for Finance Hon. Dr.  William Augustao Mgimwa (Mp). Introducing to  the National Assembly, the Estimates of  Government Revenue and Expenditure for the  Fiscal Year 2012/2013 and 2013/2014.

xxxvi.            Mpogole, H., Mwaungulu, I. Mlasu, S. and Lubawa,  G. (2012). Multiple Borrowing and Loan  Repayment: A Study of Microfinance Clients at  Iringa, Tanzania. Global Journal of Management  and Business Research, Volume 12 Issue 4 Version  1.0 March 2012.

xxxvii.            Morduch, J. and Haley, B. (2002). Analysis of the  Effects of Microfinance on Poverty Reduction NYU Wagner Working Paper No. 1014, The  Canadian International Development Agency.

xxxviii.            Mwakajumilo, S.L.I. (2011). The Role of Informal  Microfinance Institutions in Saving Mobilization,  Investment and Poverty Reduction: A Case of  Savings and Credit Cooperative Societies  (SACCOS) in Tanzania from 1961-2008.  Unpublished Doctral Thesis, St. Clements  University.

xxxix.            Nelson, B. (2012). SACCOS Yatoa Msaada wa  Madawati, Magodoro. Mwananchi News paper,  Thursday November 1, 2012. Retrieved on  20/12/2013, from: http://www.mwananchi.co.tz/- /1597570/1609504/-/xh4aof/-/index.html .

     xl.            Ngehnevu,C. B. and Nembo, F. Z. (2010). The  Impact of Micro Finance Institutions (MFIs) in the  Development of Small and Medium Size Businesses  (SMEs) in Cameroon. Published BSc Thesis,  Swedish University of Agricultural Sciences,  Uppsala, No: 601, ISSN 1401-4084.

    xli.            Nghiem, H.S. (2009). Analyzing the Effectiveness  of Microfinance in Vietnam: A Conceptual  Framework, JEL classification - O12, P34, R29  School of Economics, The University of  Queensland.

  xlii.            Nzekwe, A. I. (2012). Impact of Cooperative Societies on Members’ Business: In Cooperative  Finance in Developing Economies, 2012  International year of Cooperatives, pp 209-217.

 xliii.            Oke, J.T.O. Adeyemo, R. and Agbonlahor M.U.  (2007). An Empirical Analysis of Microcredit  Repayment in Southwestern Nigeria. Humanity &  Social Sciences Journal 2 (1): 63-74, 2007.

xliv.            Okwoche, V. A., Asogwa, B. C. and Obinne, P. C.  (2013). Evaluation of Agricultural Credit Utilization  by Cooperative Farmers in Benue State of Nigeria.  European Journal of Economics, Finance and  Administrative Sciences Issue 47 (2012).

  xlv.            Olomi, D. (2006). Policy Dialogue Seminar Paper  on Opportunities and Challenges for Rural SMEs Development in Tanzania. Economic and Social  Research Foundation.

xlvi.            Park, A., Ren, C. and Wang, S. (2003). Micro Finance, Poverty Alleviation and Financial Reform  in China. Workshop on Rural Finance and Credit  Infrastructure in China 13-14 October 2003, Paris France.

xlvii.            Qin, X. and Ndiege, B.O. (2013). Role of Financial  Development in Economic Growth: Evidence from  Savings and Credits Cooperative Societies in  Tanzania. International Journal of Financial  Research, Vol. 4, No. 2; 2013.

xlviii.            REDET, (2008). Empowering Grassroots  Cooperatives in Tanzania, University of Dar es  salaam. Retrieved from:  http://www.redet.udsm.ac.tz/documents_storage/20  08-3-28-10-14-17_%20kamata empowering%20grassroots%20cooperatives%20in %20tanzania.pdf, on 20/12/2013.

xlix.            Sebhatu, K.T. (2012). The Impact of Savings and  Credit Cooperatives in Ofla Wereda Tigray Region  of Ethiopia. European Journal of Business and  Management, Vol 4, No.3, 2012.

         l.            Sharma, M., Simkhada, N. R. and Shrestha, R.  (2005). Impact Assessment of SACCOS in Nepal’s  Hill Districts: Findings of an action research.  Kathmandu: Centre for Micro-Finance (Pvt) Ltd.

       li.            Simanowitz, A. (2001). From Event to Process:  Current Trends in Microfinance Impact Assessment.  Improving the Impact of Microfinance on Poverty  Action Research Programme, Thematic Report No. 5.

      lii.            Stewart R., Rooyen, V. C., Dickson, K., Majoro M.  and Wet, T. (2010). What is the impact of  Microfinance on Poor People? A systematic Review  of Evidence from Sub-Saharan Africa, Technical  Report, London: EPPI-Centre, Social Science  Research Unit, University of London.

    liii.            Tranmer, M. and Elliot, M. (n.d). Binary Logistic  Regression.Cathie Marsh Centere for Census and  Survey Research. Retrieved from:  http://www.ccsr.ac.uk/publications/teaching/blr.pdf,  on 18/12/2013.

    liv.            Wangwe, S. (2004). Innovation in Rural Finance in  Tanzania. Paper prepared for The Third Annual  Conference on Microfinance held from 15th to 17th  March 2004 at the AICC, Arusha, Tanzania.

     lv.            Warue, B. N. (2012). Factors Affecting Loan  Delinquency in Microfinance Institutions in Kenya.  International Journal of Management Sciences and  Business Research, 2012, Vol. 1, Issue 12.

    lvi.            Wenner, M., Navajas, S., Trivelli, C. and Tarazona,  A. (2007). Managing Credit Risk in Rural Financial  Institutions in Latin America, Inter-American  Development Bank.

  lvii.            Zamora, J.T. and Agutaya, C.A.C. (2011). The  Performance of Multi-Purpose Cooperatives in the  First District of the Province of Oriental Mindoro,  Philippines: In International Conference on  Management (ICM 2011) Proceeding, Pp 804-837.

Cite this Article: