Success of microfinance institutions in Tanzania: the case of savings and credit co-operative societies (saccos)
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Date
2014
Journal Title
Journal ISSN
Volume Title
Publisher
SOKOINE UNIVERSITY OF AGRICULTURE
Abstract
Success of Microfinance Institutions (MFIs) in terms of financial access and poverty
reduction while some of MFIs do not succeed has remained inadequately established.
That was a knowledge gap focused by this study on “Success of microfinance
institutions in Tanzania: The Case of Savings and Credit Co-operative Societies
(SACCOS)”. The study was intended to establish factors which lead to success of
SACCOS. The specific objectives were to examine backgrounds of successful
SACCOS (SUS), establish characteristics of SUS, examine the internal environment
that affects success, investigate the external environment that influences success and
determine key factors which lead to success of SACCOS. Primary data were
collected using a questionnaire which was administered to 120 SACCOS in Dar es
Salaam, Dodoma, Kilimanjaro and Morogoro regions. Descriptive statistics were
used to describe backgrounds, internal and external environments of SACCOS. Logit
regression model en abled the researcher to establish the most important success
characteristics. Probit regression model enabled the researcher to determine the key
factors which lead to success of SACCOS. Backgrounds of SUS were revealed to
base on common bond and age of SACCOS. Twenty two aspects of internal and
external environments were revealed to influence success of SACCOS. Fourteen
success characteristics were established. The most important ones (Wald statistics >
1.96 in parentheses) were, ratio of number of staff to members being one to 154
(15.392), total number of active members being > 1000 (10.344), positive changes in
business of members (2.538), origin of SACCOS being members (2.097) and
repayment rate of loans being > 95% (1.983). Nagelkerke R2 was 0.734. Twelve
factors which led to success of SACCOS were established; three of them wereiii
determined to be key success factors signifi cant at P<0.05 and Z > 1.96. They
included, attitude of members to their SACCOS (Z = 2.24, Coefficient = 0.68), actual
number of active members (Z = 2.11, Coefficient = 0.84), ability of SACCOS to
provide services (Z = 2.07, Coefficient = 7.49). Pseudo R2 was 0.877. It is concluded
that success of SACCOS depend on their backgrounds, success characteristics,
internal environment, external environment and success factors.
Description
PhD Thesis
Keywords
Microfinance institutions, Savings, Credit co-operative