Evaluation of the Performance and Constraints of Savings and Credit Cooperative Societies (SACCOs) in Tanzania

Abstract

Despite economic and financial reform, Tanzania's economy has remained unsustainable, and various financial institutions, including Savings and Credit Cooperative Societies (SACCOs), have faced constraints in their operations. This study investigated the types of loans, constraints, and level of performance of two Savings and Credit Cooperative Societies in Mbeya. The study employed qualitative and quantitative methods that included a structured documentary review, questionnaires, and interviews to collect data where 50 respondents were involved. The findings revealed that the two Savings and Credit Cooperative Societies focused on granting loans to their members. The study also found that the number of members in Tanzania Zambia Railway Authority Savings and Credit Cooperative Societies (TAZARA SACCOs) went up from 2007/08 to 2011/2012. However, the number of members in Mbeya Technical College Savings and Credit Cooperative Societies (MTC SACCOs) changed over time, likely because of the layoffs that happened after Mbeya Technical College (MTC) became Mbeya Institute of Science and Technology (MIST). It was further revealed that the two Savings and Credit Cooperative Societies faced a major constraint in their limited financial ability. The study recommends that the two Savings and Credit Cooperative Societies should develop a variety of loan products suitable for the majority of their members. On the other hand, these Savings and Credit Cooperative Societies should invest in people by increasing attractive services and products so as to attract more members. To overcome financial constraints, the Savings and Credit Cooperative Societies need to expand their sources of financing to include non-traditional and non-governmental partners. In this aspect, the Savings and Credit Cooperative Societies need to seek new forms of external capital and diversify their sources of funds without jeopardising existing resources.