Abstract:
The proliferation of fraud among organizations has continued to be a major challenge worldwide. Current
reports indicate that fraud among co-operatives in Tanzania amounted to an alarming figure of more than
TZS 124 billion in the year 2023. However, there has been limited research addressing the issue of fraud in
cooperatives in the Tanzanian context. The purpose of this research was therefore to explicate the types of
fraud affecting employee and community-based Savings and Credit Co-operative Societies (SACCOS) in
Tanzania. Specifically, the study aimed at establishing the dominant types of fraud facing SACCOS, and
comparing the opinions from employee-based and community-based SACCOS. The variables measured
include the independent variables (types of fraud: internal, external and collusion), the dependent variable
(likelihood of fraud occurrence) and moderating variable (SACCOS category: employee-based, community based). Primary data were collected from 223 SACCOS from three regions in Tanzania (Kilimanjaro,
Arusha, and Tanga) using a questionnaire while an interview guide was used to collect data from 9 key
informants. Data was analyzed using Partial Least Square – Structural Equation Modelling (PLS-SEM) and
moderation was tested using PLS – Multi-Group Analysis (PLS-MGA). Findings indicate that internal fraud
is the most dominant type of fraud among SACCOS, followed by collusion fraud and external fraud is the
least dominant. Additionally, findings reveal significant differences between the perceived types of fraud
facing employee-based and community-based SACCOS. Whereas employee-based SACCOS perceived
collusion fraud to be more dominant, community-based SACCOS were of the opinion that internal fraud is
more dominant. The study concludes that there are varied perceptions among employee and community based SACCOS on the types of fraud occurring in these organizations. It is recommended that SACCOS
should implement strong internal controls and also that fraud control education be provided to SACCOS
employees, managers and Board members in order to reduce incidences of internal fraud.
