THE ROLE OF SAVINGS AND CREDIT COOPERATIVES (SACCOS) ON FINANCIAL INCLUSION IN ZIMBABWE

Abstract

This paper investigated the role of Savings and Credit Cooperatives (SACCOs) in Zimbabwe using a national baseline survey. Several economic challenges over the past two decades left ordinary citizens unbanked and financially excluded. SACCOs are viewed as a viable option towards financial inclusion. Classical and modern theoretical literature as well as experiences from other African countries were discussed. Data was collected using a triangulation method of questionnaires, interviews and focus group discussions (FGDs) across 147 SACCOs. It was observed that there are around 6,028 cooperatives with only 4.8% (289) being SACCOs and majority of members cannot distinguish between cooperatives and SACCOs. More than 90% cited that economic and political conditions eroded their savings value thereby reducing confidence in thrift models. 77 SACCOs (52.8%) do not own assets, and only 6.2% have over 1,000 members. Discrepancies emanate from inconsistent subscriptions, unfavorable and outdated government by-laws. SACCOs are classified as high-risk borrowers due to inconsistent subscriptions and poorly audited financial statements resulting in high interest rates and adverse selection. The study recommends additional training to increase administrative capacity and the scope of SACCOs, increased coordination of operations to reduce systematic risk through consistent by-laws and economic policies that stimulate stability and restore confidence in the financial sector.