Social Performance of Savings and Credit Co-operative Societies in Mwanza and Tabora Rural Areas, Tanzania

Abstract

The study was triggered by an increased number of SACCOS in Tanzania since 1990s when financial market reforms took place. The study built that there was uncertainty on whether the increase in number of SACCOS reflects their social performance in terms of outreach services and impact on livelihoods to members. Thus, the study was conducted with regard to the following specific objectives: • Examine the individuals’ determinants of participation in SACCOS, • Determine quality of services offered by SACCOS • Determine the impact of SACCOS’ services on livelihood outcomes of members and • Establish relationship between SACCOS’ depth of outreach and impact on poverty reduction. The study depended on blended models and theories. Specifically, it was guided by • The Participation Chain Model (PCM) • The Expectancy Disconfirmation Theory (EDT) • Economic theory of credit union (ETCU) • Service Quality Model (SERVQUAL model) • The Sustainable Livelihood Approach (SLA) • The framework of Critical Microfinance Triangle (CMT) The study was also guided by positivism philosophy which holds assumptions that events have their causes and that through science these causal links can eventually be uncovered and understood. The scientific method in positivism begins with a theory which defines a certain construct, then data are collected and analysed to either refute or support the theory. Positivists reduce the causes of a problem into discrete sets of ideas to test variables consisting of hypotheses and research questions. Scientists in positivism tend to generalise to the world their findings derived from the hypotheses. ✓ The study was conducted in two regions of Mwanza and Tabora, the reasons for selection of these regions were based on the growing number of SACCOS. The study involved six SACCOS (Chasigo, Uvumnya, Upendo, Victoria, Nyaluhwa and Uzinza) which were purposively selected from four districts (Igunga, Nzega, Magu and Sengerema) in Mwanza and Tabora regions. The study employed quasi-experimental design where data were collected from members and non-members and examined at once. Mixed methods approach was adopted, thus both quantitative and qualitative data collection techniques and analyses were used. The study randomly selected a total of 500 respondents of whom 200 were members and 300 were non-members. Quantitative data was collected through a structured questionnaire while key informant interview guide was used to gather qualitative data respectively. Thematic analysis technique was used to analyse qualitative data. The quantitative data were analysed by using descriptive statistics, paired samples t-test, independent samples t-test, simple linear regression, logit regression model, Propensity score matching (PSM) and Microfinance Poverty Assessment Tool (MPAT). The prognostic results from data analyses indicated that: • Ownership of microenterprise had highest (45.9%) influence for individuals’ decision to participate in SACCOS while lack of awareness on the operation of SACCOS was perceived as the major hindering factor which impeded non-members to participate in SACCOS • Thus, individuals’ decision to participate in SACCOS are determined by both socio economic and institutional factors. • SACCOS offered unacceptable services to members due to poor leadership in loan management • In SACCOS, the number of members negatively influenced service quality while poor service quality influenced members’ withdrawal. • Moreover, it was found that members were less effective in fulfilling their responsibilities as suppliers of services. • The SACCOS offered unacceptable services quality to its members due to poor leadership particularly in management of loan portfolio, as well as irresponsible members. • Service quality affects negatively members’ withdrawal from SACCOS while numbers of members affect negatively the service quality in SACCOS. • The study found that that livelihood outcomes and poverty level of members were better compared to non-members and that a SACCOS with deepest outreach had also the lowest percentage of members in the lowest poverty group. • SACCOS are potential financial institutions for livelihood improvement and poverty reduction. • SACCOS which had deepest outreach also impacted highly on poverty reduction among members. Summary of the innovative findings for policy action • Individuals’ Determinants of Participation in SACCOS It was found that determinants of individuals’ decision to participate in SACCOS are based on personal factors (socio-economic) and institutional factors (lack of awareness due to poor mobilisation campaign at SACCOS level) in the study area. Ownership of a microenterprise is a leading socio-economic factor while lack of awareness is a leading institutional factor associated with participation in SACCOS in the study areas. • Service quality in SACCOS Firstly, it was found that SACCOS offered unacceptable services quality due to poor leadership particularly in management of loan portfolio, as well as irresponsible members. Secondly, it was found that service quality affects negatively members’ withdrawal from SACCOS while number of members affect negatively the service quality in SACCOS. • Impact of SACCOS’ services on Livelihood Outcomes It was found that SACCOS’ services impacted positively and significantly the rural livelihood with respect to maize yield, household assets, savings, food expenditures and non-food expenditures for treated households relatively to control group in the study area.