Are Rural SACCOS in Tanzania Sustainable

Author(s)

Dr. Joseph Magali ,

Download Full PDF Pages: 111-126 | Views: 338 | Downloads: 97 | DOI: 10.5281/zenodo.3445896

Volume 3 - January 2014 (01)

Abstract

Many rural projects and programmes in Tanzania flourish and diminish before and after phasing out of donors’ facilitation respectively. This study applied the qualitative, descriptive and multivariate regression analysis to investigate whether the rural Savings and Credits Cooperative Societies (SACCOS) in Eastern, Central and Northern zones of Tanzania were still sustainable after the phasing out of capacity building projects in 2013. The study also examined the outreach level of the rural SACCOS since their establishment. The study revealed that 46% of SACCOS in rural Tanzania especially in Eastern and central zone were not sustainable because they accumulated large amount of NPL and they did not issue new loans from 2006-2013. The study further revealed that savings and deposits to total assets influenced the outreach negatively while cost per borrower and OSS influenced the outreach positively. On the other hand, grants to total loans, cost per borrower, NPL to equity influenced the sustainability of rural SACCOS negatively while average loan size and age of SACCOS influenced the sustainability of rural SACCOS positively. This study recommends that the rural SACCOS in Tanzania should devise various strategies to achieve financial sustainability such as volunteering labour, accumulate high amounts of own equity in forms of shares, collect the NPL from members and apply credit risks management techniques including insurance coverage to reduce the NPL. Finally, I call for policy action to review the operations of the rural SACCOS and establish the stringent regulations and supervisions by the government. 

Keywords

Rural SACCOS, outreach, Sustainability, Tanzania

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