Abstract:
The importance of cooperatives in Tanzania need not be overemphasized. From 1920s to date,
cooperation continues to play a crucial role in Tanzania's economy. Over the years, the cooperatives
have faced changes emanating from both political and economic reforms. This paper assesses the
effects of market liberalization on the performance of cooperatives with special reference to
Kilimanjaro Native Cooperative Association (KNCU) and Arusha Cooperative Union (ACU). The
study was carried out in 2005. A least squares logarithmic trend analysis demonstrated that coffee
collections from both unions have been on a constant decline even before liberalization. However, the
declines were more after than before liberalization. Comparatively, KNCU experienced less market
share loss than ACU. This was possibly due to some strategies employed by KNCU to survive the
competition, such as rightsizing the union by leasing out some of its non-profit-making enterprises;
and reduction of bureaucracy in decision making. Also, KNCU is important historically as it was the
first co-operative to be registered in Tanzania. It is thus believed belonging to KNCU gives the farmers
some sense of pride.
