Abstract:
In this paper we examine the role of Savings and Credits Cooperative Societies (SACCoS) in the economic growth
of Tanzania by answering two main questions. First, are financial services in SACCoS significant factors for
economic growth? Second, are financial services in SACCoS Granger causing economic growth? We use credits-real
GDP per capita ratio and savings-real GDP per capita ratio as proxy measures for financial services and real GDP per
capita for economic growth. We employ Newey-West standard errors regression model and Wald Granger causality
tests in analysis. The sample period is 1990-2012. Data are from the Ministry of Agriculture, Food and Cooperatives,
World Economic Outlook (WEO) database, International Monetary Fund (IMF). The findings show that, there is a
strong positive association between the financial services and the economic growth, also there istwo-ways Granger
causality between them. However, we find out that savings are much important in fostering economic growth as
compared to credits/loans. These criteria make SACCoS the distinct microfinance institutions in the economic
development in Tanzania and therefore should be promoted with more emphasis on the savings objective.
