THE IMPACT OF SAVING AND CREDIT COOPERATIVE SOCIETIES IN

IMPROVING LIVELIHOOD OF CLIENTS IN MOSHI RURAL DISTRICT

THOMAS M. MALLYA

A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS

ADMINISTRATION

DEPARTMENT OF ACCOUNTING AND FINANCE

THE OPEN UNIVERSITY OF TANZANIA

2020
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CERTIFICATION

The undersigned certifies that he has read and hereby recommends for acceptance by

The Open University of Tanzania a dissertation entitled: "The Role of SACCOS on

Improving Livelihood of Clients in Moshi Rural District". In partial fulfillment of

the requirements for the award of degree of Master of Business Administration of

The Open University of Tanzania.

_____________________________________

Dr. Joseph Magali

(Supervisor)

____________________________

Date
 iii

COPYRIGHT

No part of this Dissertation may be reproduced, stored in any retrieval system, or

transmitted in any form by any means, electronic, mechanical, photocopying,

recording or otherwise without prior written permission of the author or The Open

University of Tanzania in that behalf.

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DECLARATION

I, Thomas M. Mallya, declare that, the work presented in this dissertation is

original. It has never been presented to any other University or Institution. Where

other people’s works have been used, references have been provided. It is in this

regard that I declare this work as originally mine. It is hereby presented in partial

fulfillment of the requirement for the Degree of Master of Business Administration

of The Open University of Tanzania.

……………………………………….

Signature

……………………………………….

Date
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DEDICATION

This work is dedicated to my beloved wife Romana Mallya and my family. Your

strong desire for learning and acquiring knowledge is the reason for this MBA. You

are lovely and charming beyond measure with great desire for my postgraduate

studies. Keep working hard and charming to the family. I will continue to make you

Proud.
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ACKNOWLEDGEMENT

I deeply appreciate the God Almighty in whom I drew the strength to perform and

complete this dissertation.

I would like to thank and appreciate my family for enabling fulfillment of my long-

valued dream of becoming MBA holder.

I also extend appreciation to my supervisor, Dr. Joseph Magali for his time and

assistance in the development of this dissertation.

My appreciation is extended to Mr. Julius Pius for his valuable inputs in data

analysis.

I am grateful to my fellow students of OUT for their cooperative, support and

keeping me focused on attaining my goal.

Lastly but not least, I extend my appreciation to all Board members of

KKIKALORA SACCOS and their members for cooperation given to me during the

data collection.
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ABSTRACT

This study determined the contribution of SACCOs in improving the household

wellbeing in Moshi rural district. This was an analytical cross-sectional study

conducted from July 2019 to August 2019 at KKIKALORA SACCOS. Simple

random sampling was used to obtain 120 members of the SACCOS for an interview.

Data collection was done using questionnaire and Focus Group Discussion (FGD)

methods. Quantitative data was analyzed with help of SPSS Version 23.0. Numerical

data was summarized using mean and standard deviation while categorical data was

summarized using frequency and percent. Paired t-test was employed to test the

significance influence of SACCOS on clients’ livelihood at 5% level of significance.

The quantitative results were presented using tables and figures. Thematic analysis

was employed for qualitative data and was presented in narrative method. The result

showed that SACCOS has raised assets, education and health support, food adequacy

and improved business capital to its members. The study concludes that SACCOS

has positive impact on saving mobilization, assets, education, health, business and

investment. It has significant impact on food adequate and diet improvement. The

education on savings in totality is a vital strategy to improve savings mobilization in

SACCOs members. Despite these strengths there are existing challenges that limit its

proper utilization include lack of knowledge in entrepreneurship and financial

management, failure to return loans on time, and misallocation of loans. This study

recommends that the government should closely supervise SACCOS so as to

increase their contributions on livelihood improvement.

Keywords: Household wellbeing, KKIKALORA SACCOS, Moshi rural district,

saving mobilization
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TABLE OF CONTENTS

COPYRIGHT ............................................................................................................ iii

DECLARATION ....................................................................................................... iv

DEDICATION ............................................................................................................ v

ACKNOWLEDGEMENT ........................................................................................ vi

ABSTRACT .............................................................................................................. vii

LIST OF TABLES ................................................................................................... xii

LIST OF FIGURES ................................................................................................ xiii

LIST OF ABBREVIATIONS ................................................................................ xiv

CHAPTER ONE ........................................................................................................ 1

INTRODUCTION ...................................................................................................... 1

1.2 Background to the Study .................................................................................. 1

1.3 Statement of the Research Problem ................................................................. 3

1.4 Research objectives .......................................................................................... 4

1.4.1 General Research Objective ............................................................................. 4

1.4.2 Specific Research Objectives ........................................................................... 4

1.5 Research Questions .......................................................................................... 5

1.5.1 General Research Question .............................................................................. 5

1.5.2 Specific Research Questions ............................................................................ 5

1.6 Relevance of the Study ..................................................................................... 5

1.7 Scope and Limitations of the Study ................................................................. 6

1.8 Dissertation Framework ................................................................................... 6

CHAPTER TWO ....................................................................................................... 8

LITERATURE REVIEW.......................................................................................... 8
 ix

2.1 Overview .......................................................................................................... 8

2.2 Conceptual Definitions ..................................................................................... 8

2.3 Theories ............................................................................................................ 9

2.3.1 Agency Theory ................................................................................................. 9

2.4 Empirical Literature Review .......................................................................... 12

2.4.1 Role of SACCOS in improving household wellbeing ................................... 13

2.4.2 The Impacts of SACCOS on Clients’ Livelihood Improvement ................... 13

2.4.3 The Challenges Hindering Impact Realization for SACCOS’ Clients .......... 16

2.5 Research Gap .................................................................................................. 17

2.6 Conceptual Framework .................................................................................. 17

CHAPTER THREE ................................................................................................. 19

RESEARCH METHODOLOGY ........................................................................... 19

3.1 Overview ........................................................................................................ 19

3.2 Study Area ...................................................................................................... 19

3.3 Research Design ............................................................................................. 20

3.4 Estimation of Sample Size ............................................................................. 20

3.5 Sampling Procedure ....................................................................................... 21

3.5.1 Sampling for Quantitative Data ...................................................................... 21

3.5.2 Sample Size for Qualitative Data ................................................................... 21

3.6 Data Collection Techniques ........................................................................... 22

3.6.1 Quantitative Data ............................................................................................ 22

3.6.2 Qualitative Data .............................................................................................. 23

3.7 Data Quality Control ...................................................................................... 23

3.8 Variables and Measurement ........................................................................... 24

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3.9 Data Validity and Reliability.......................................................................... 24

3.9.1 Data Validity .................................................................................................. 24

3.9.2 Data Reliability .............................................................................................. 25

3.10 Research Limitations ...................................................................................... 25

3.11 Data Analysis Plan ......................................................................................... 25

3.11.1 Quantitative Part ............................................................................................. 26

3.11.2 Qualitative Part ............................................................................................... 26

3.12 Ethical Consideration ..................................................................................... 27

CHAPTER FOUR .................................................................................................... 28

RESEARCH FINDINGS AND DISCUSSION ...................................................... 28

4.1 Overview ........................................................................................................ 28

4.2 Quantitative Findings ..................................................................................... 28

4.2.1 Socio-Demographic Characteristics of the Participants ................................. 28

4.2.2 Beneficiaries From Services Provided by SACCOS ...................................... 30

4.2.3 The Influence of SACCOS Services on Clients Assets ................................. 31

4.2.4 The influence of SACCOS Services on Education and Health ...................... 32

4.2.5 The Influence of SACCOS Services on Food Adequacy ............................... 34

4.2.6 The Influence of SACCOS Services on Business Capital ............................. 34

4.3 Qualitative Results ......................................................................................... 36

4.3.1 Impacts Realized by Women group ............................................................... 37

4.3.2 Impacts realized by men group ...................................................................... 37

4.3.3 Impacts Realized By Youths’ Group ............................................................. 37

4.3.4 Impacts Realized by People with Physical Disability .................................... 38

4.4 The Challenges of SACCOS in the Community ............................................ 38

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CHAPTER FIVE...................................................................................................... 40

CONCLUSION AND RECOMMENDATIONS ................................................... 40

5.1 Overview ........................................................................................................ 40

5.2 Conclusion ...................................................................................................... 40

5.3 Recommendations .......................................................................................... 41

5.3.1 Training SACCOS Members ......................................................................... 41

5.3.2 Government Stringent Supervision and Awareness Creation ........................ 41

5.4 Contribution of the Study to Theories ............................................................ 42

5.5 Direction for Future Studies ........................................................................... 43

REFERENCES ......................................................................................................... 44

APPENDICES .......................................................................................................... 51
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LIST OF TABLES

Table 4.1: Socio-Demographic Characteristics Of The Participants (N=120) ......... 29

Table 4.2: The Influence of SACCOS Services on Education and Health

(N=120) ................................................................................................... 32

Table 4.3: The Influence of SACCOS Services on Food Adequacy (N=120) ......... 34

Table 4.4: The Influence of SACCOS Services on Business Capital (N=120) ....... 35
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LIST OF FIGURES

Figure 2.1: Conceptual Framework of Poverty Reduction Through SACCOS ...... 18

Figure 4.1: What services do you get from SACCOS? (N = 120) .......................... 30

Figure 4.2: The Influence of SACCOS Services on Clients’ Assets (N=120) ........ 31
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LIST OF ABBREVIATIONS

AU African Union

BOT Bank of Tanzania

ELCT Evangelical Lutheran Church of Tanzania

FGD Focus Group Discussion

FINCA Foundation of International Community Association

GDP Gross Domestic Product

IGA Income Generating Activity

MFIs Microfinance Institutions

NBST National Bureau of Statistics Tanzania

PRIDE Promotion of Rural Initiatives and Development

Enterprises

ROSCAs Rotating Savings and Credit Association

SACA Savings and Credit Associations

SACCOS Savings and Credit Cooperation Societies

SDGs Sustainable Development Goals

SEDA Small Enterprises Development Association

SPSS Statistical Package for Social Science

TAS Tanzanian shillings

UNCTAD United Nation Conference on Trade and

Development

URT United Republic of Tanzania

USAID United States Agency for International Development

USD United States Dollar

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VICOBA Village Community Bank

WB World Bank
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CHAPTER ONE

INTRODUCTION

1.1 Overview

This chapter contains the introductory information concerning the research problem

and its context. The sections contained here are background to the study, statement of

the research problem, research objectives, research questions and relevance of the

study.

1.2 Background to the Study

Saving and Credit Co-operative Societies (SACCOS) is a financial institution made-

up of a group of people whose goal is to collect money and exchange or to trade

directly and to share benefits (Cheruiyot et al., 2009; Frank et al., 2015). These are

community based financial organizations that are owned and controlled by their

members, operate primarily on the funds generated through members’ savings and

have savings and credit supply as their main activity (Ritchie, 2007; Sebhatu, 2017).

SACCOS are an integral part of the financial system by which communities are

mobilized to engage in productive activities so as to generate income, create

employment opportunities, stimulate the economy of a well-defined area and thereby

improve their livelihood situation (Sebhatu, 2012). Before SACCOS there was

ROSCAs in 1920 and they were common in cash crop producing areas (Adalbertus,

2018).

Alleviation of poverty needs systematic plan and financial support that can be

determined by the economic status in the areas (Krantz, 2001). Over the past several
 2

decades, there has been serious concern on poverty reduction, especially in

developing countries. It has been demonstrated that the success of utilization of

microcredit for poverty reduction at individual and household level depends on

borrowers entrepreneurial skill level, gender relations in the household and often

times, the purpose of microcredit is solely for direct investment, smoothening

consumption or indirect investment (Mugabi, 2010).

It is reported that SACCOS has better option for accessing microcredit that can

sustainably reduce poverty among the poor people and is belong to local members

that being easier to control (Ikua, 2015; Nnyanja, 2017; Oluyombo, 2016). It allows

members equity as a major source of funds with which to offer themselves financial

services (Cheruiyot et al., 2009).

In order to co-ordinate effectively SACCOS in Tanzania, the Cooperative Societies

Act, 2013 was approved by parliament and came into effect in 2014 to enable the

revival of cooperative societies in Tanzania. Following enactment of this law,

members of cooperatives are free to decide whether or not to form middle level

structures depending on their demands (URT, 2009). According to BOT, the

financial stability report in 2013, there were 5,559 SACCOS operating in Tanzania

of which 3,043 were in rural areas. Membership stood at 1.15 million of which 1.13

million were individuals and 24,631 were community based organizations including

VICOBAs indicating outreach to unbanked population (BOT, 2013).

Many studies found that SACCOS help in raising standard of living of clients

(Dainah, 2012; Frank et al., 2015; Nnyanja, 2017; Odoyo, 2012). Studies that
 3

revealed positive impacts of SACCOS to the livelihood of clients include Magali

(2013) and Girabi and Mwakaje (2013). The studies which concentrate only on

women clients include Mwanga (2016), Josephat et al. (2017), Kato and Kratzer

(2013), Kyara (2013) and shekilango (2012). However, some studies which revealed

the negative impacts of SACCOS include Kato and Kratzer (2013) and Magali

(2013). This study assesses the impacts of SACCOS on the wellbeing of the clients

in rural setting, especially in Moshi rural district in Kilimanjaro region.

1.3 Statement of the Research Problem

Within Africa, the Sub-Saharan region is the poorest region where poverty is unique

in the sense that majority particularly rural people are extremely poor (Churk, 2015).

Tanzania is one of Sub Saharan countries where poverty is also extreme, and about

75% of Tanzanians are living in rural areas where the incidence and severity of

poverty is twice as high than in urban areas (UNDP, 2011; WB, 2012). Poverty

deprives people of good health, education, social life, and environmental quality,

spiritual and political freedom (Odoyo, 2012).

Numerous studies indicated that SACCOS are the source of income for improved

individual assets, business capital, diet and food adequacy (Mboka, 2014; Oluyombo,

2016). SACCOS offer loans for school fees, medical care, furniture and household

items, all of which enable the members to meet their daily requirements for living

(Mwangi, 2011). These contradict with some studies which have shown that loan

beneficiaries are lacking education on financial management that contribute to

misallocation of loan and hence not being able to pay back their loans on time
 4

(Churk, 2015; Sumari, 2016). In addition to that, most of the SACCOS members

reported lacking entrepreneurship skills, as the result they fail to have appropriate

selection of projects with high returns (Mboka, 2014; Victor Omollo, 2016).

The question remains whether SACCOS services have positive influence on

wellbeing to its members. With this regard, the study was motivated to identify

independent impacts of SACCOS to its members at different levels including group

of men, women, youths and people with physical disability. Therefore, this study

aimed to assess the influence of SACCOS on assets, education, health, food

adequacy and business capital’s investment using both quantitative and qualitative

approaches.

1.4 Research objectives

1.4.1 General Research Objective

The general objective of the study was to assess the influence of savings and credit

co-operative society and challenges hindering its realization in improving household

wellbeing of members in Moshi Rural in Kilimanjaro Tanzania.

1.4.2 Specific Research Objectives

The study had the following specific objectives.

i) To assess the impacts of SACCOS on clients’ livelihood improvement on assets,

education and health, food adequacy and business capital

ii) To understand the role of SACCOS for women, men, youths and people with

disabilities
 5

iii) To assess the challenges hindering impact realization for SACCOS’ clients.

1.5 Research Questions

The study had the following research questions:

1.5.1 General Research Question

What are the influence and existing challenges of savings and credit co-operative

societies in improving household wellbeing of members in Moshi Rural Kilimanjaro

Tanzania?

1.5.2 Specific Research Questions

i) What are the impacts of SACCOS on clients' livelihood improvement on assets,

education and health, food adequacy and business capital?

ii) What is the role of SACCOS for women, men, youths and people with

disabilities?

iii) What are the challenges hindering impact realization for SACCOS’ clients?

1.6 Relevance of the Study

Understanding the subsequent loans taken and returning habit of SACCOS' members

will help in effective constructions of models to assist members regarding their

choices and financial allocations before and after taking loans. This study has

described the role of SACCOS in provision alternatives to enhance the investment

for its members.

 6

This study also has explored the main challenges experienced by SACCOS members

to use loans and savings. This will help the policy makers and advisory board in

constructions of policies and conditions towards reduction of effective challenges

that affect their members in utilization of SACCOs to alleviate or escape from

Poverty when shared or published. In addition to that, this study provides the basic

information for future researchers on area of concentration regarding utilization of

SACCOS in improving livelihood.

1.7 Scope and Limitations of the Study

The major limitation was lack of adequate funding which limited the coverage of the

intended sample size.

1.8 Dissertation Framework

This Dissertation is organized into five chapters. The current chapter introduced the

study and provided an overview of the research problem and its background. The

objectives of the study are also presented in chapter one. The main literatures

consulted for the study are presented in Chapter two elaborating what other

researchers have reported in books, journals and scholarly articles concerning

contribution of SACCOS in improved household wellbeing. Chapter two also

explains the theories developed by researchers relevant to the current study and the

research gaps that the studies presented were also identified which reflect the base

for this study.

 7

Chapter three presents the methodological approaches employed in this study. These

include study designs, data collection methods, description of the study settings,

study procedures, data quality management, analysis plan and ethical considerations.

Chapter four presenting the findings and discussion of the study based upon the study

objectives with comparisons to other literature’s findings. Here is where the

expectation of the study was looking to provide better comparison with other

research findings to fulfill the research gaps. Chapter five covers conclusion,

recommendations and direction for future studies.

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CHAPTER TWO

LITERATURE REVIEW

2.1 Overview

This chapter provides a review of the literature on the topic based on the objectives

and interest of the study. The literature review involves examining documents, such

as books, magazines, journals, and dissertations. Therefore, this chapter presents the

review of literature related with utilization of SACCOs in improving household

wellbeing. In this study literatures were search using search engines such as Google

scholars, PubMed and Emerald.

2.2 Conceptual Definitions

Savings and Credit Cooperatives Societies (SACCOS) are an integral part of the

financial system by which communities are mobilized to engage in productive

activities so as to generate income, create employment opportunities, stimulate the

economy of a well-defined area and thereby improve their livelihood situation

(Adalbertus, 2018). The Cooperative Development Policy in Tanzania, states that as

part of the initiatives to eradicate poverty, micro-financing services have become one

of the important sources of finance to the poor to expand their businesses and

productive activities. Most SACCOS have been established in urban areas and at

work places (Girabi et al., 2013). As a result members of Agricultural Marketing

Primary Cooperatives have found it impossible to save money that could have

enabled them to buy shares and thereby increase the capital of their cooperatives

(URT, 2013).
 9

Livelihood is the logical understanding of the assets, or capitals, that people draw

upon to make a living and to categorize them into the following five groups: human,

social, natural, physical, financial, and political capitals (UNDP, 2012).

Livelihood improvement is all aspects that involves improved life standards for

people, including economic growth, health and education services, assets and

investments (Ashley and Hussein, 2000; Krantz, 2001).

Poverty leads to poor health, education, social life, and poor environment, spiritual

and political conflicts (URT, 2009). Being poor can therefore force to sell physical

assets, reduce quantity and quality of food consumed, move to inferior

accommodation, postpone medical treatment or withdraw from SACCOS (Gasper,

2013; Mbagga, 2013). The hypothetical idea behind SACCOS, they improve the

livelihood of clients; in the current study. This have been explained by different

groups of people who are getting services from the SACCOS. This was the major

intention of the study to identify the influence of SACCOS in education, assets,

medical services, adequate food and diet improvement which all determines the

individual livelihood.

2.3 Theories

2.3.1 Agency Theory

The agency theory describes the relationship under which one or more person (the

principal) and another person the agent to perform some service on their behalf and

delegate some decision-making authority to the agent. Within the framework of a

 10

corporation, agency relationship exists between the shareholders and the company

executives and agents. The agent is expected to act in the best interest of the

principal, but on the contrary the agent may not make decision on the principal

interest. Likewise, the problem of agency theory arise from the separation of

ownership and management and employee and managers in a corporation could be

self-interested like SACCOS do (Awotundun. et al., 2011).

This theory discusses the problems that surface in the firms due to the separation of

owners and managers and emphasizes on the reduction of this problem, an Agency

theory arises from economics and organizational theory that discussed stakeholders

performance and cost (Meckling, 1976). This theory helps in implementing the

various governance mechanisms to control the agents’ action in the jointly held

corporations (Panda and Leepsa, 2018).

With regards to relationship between agency theory and SACCOS, there is a

common bond for saving money together and from their savings to make loan to

each other for provident or consumption and obtain other financial services (Adams,

1995). SACCOS management link the gap between borrowers and savers thus

reducing information asymmetry and limiting moral hazards. In terms of principal

agency relationship, the closeness of savers and borrowers and SACCOS user-

owner, user control and user benefit approach minimizes the conflicts that emerge in

the agency relationship (Morris, 1995).

Agency theory can be circumvented by interest among firm stakeholders, where their

interests are common, it tend to be lowered (Bendickson et al., 2016). Agency theory
 11

conflict can as well be lowered where principal is knowledgeable of the agent’s

activities (Fama, 2008). This is related with SACCOS as in case of SACCOS’

membership is normally drawn from a common pool, same community, a church, a

mosque, employer and locality are expected to reduce the agency principal

challenges in SACCOS (Mboka, 2014).

SACCOS are perceived as an appropriate micro-financing outlet for rural and poor

people. People have, so far, positively responded to the call to form SACCOS both in

rural and urban areas (Nkuru, 2015).

SACCOS operates like other credit unions to generate a similar sense of ownership

among the financially excluded and thus enable them to avail themselves of financial

services’ appropriate to their needs. Credit unions are regarded by them as being best

placed, within the financial services industry, to provide low-cost financial services

to those on low incomes or to those who have no access to affordable banking

services (Schnabel, 2001).

Study in Nigeria revealed that shareholder`s objective which is to get satisfactory

returns on their investment had been ignored; the employees who are the corporate

insiders received substantial share of the organization earnings while huge portion of

the earnings were retained without due consideration of the shareholders which

represent the fundamental of the SACCOS (Chemakai et al., 2018).

The agency theory is relevant to help to understand the challenges that surround

ownership, contractual agreement, management interrelationship between small

 12

business owners and external providers including SACCOS’ clients (Mboka, 2014).

In addition to that, agency theory often describe “residual claimant” as being the

beneficiaries of joint action whether it is an investor-owned firm or a cooperative if a

traditional model of principal-agent relationship is applied then you have an

ambiguous definitions of what group is the primary recipient of fruits of the

organizational effort as it operated in SACCOS (Mboka, 2014). It is noted that

SACCOS being an artificial person, interacts and enters into contracts with other

entities. This brings about an agency relationship between the SACCOS and the

entities (Otieno et al., 2015).

The current study focuses on the impact of SACCOS in improving livelihood which

address the life standards of people, including economic growth, health, education

services, assets, investments, food adequacy and diet improvement; which all

depends on individual capacity and family income. Looking at SACCOS members

men, women, youths and people with disabilities joining SACCOS with major aim of

accessing saving and loan services for their improved wellbeing. The achievement of

these depends on good relationship between members and SACCOS’ management.

This is linked with agency theory as it focuses on the principal and agency

relationship to alleviate existing challenges arises among borrowers.

2.4 Empirical Literature Review

Through gaining repeated loans, the SACCOS’ members can make investment to

start new business or expansion of the existing business, which will improve the
 13

income and the living standard of the members (Huppi and Feder, 2014; Mbagga,

2013; Mwangi, 2011; Nnyanja, 2017).

2.4.1 Role of SACCOS in improving household wellbeing

According to Bailey (2001), SACCOS offer the following products to their members:

shares, savings, loans, life deposits and funeral insurance (Ng’ondi, 2013). Savings

and credits cooperatives have the big role in poverty reduction but it depends on the

number of active members (without outstanding loans), loan size, number of saving

clients, volume of saving, percentage of loans to clientele below the poverty line, the

level of transaction costs levied on the poor and the extent of client satisfaction

(Sebhatu, 2012). In order to provide the conducive environment of borrowing

SACCOS have to create an avenue to the access of funds to its members (Zikalala,

2016).

The continued access to SACCOS' loans has many implications for its members. Due

to the continued access to loans, members can reduce dependence on other sources of

borrowing in high interest charges from other financial institutions such as banks; if

the members get timely loans and with reasonable returnable interest rate (Sebhatu,

2012). In addition to that, SACCOS’ members get timely training for business and

entrepreneurship, saving and insurances for health and assets (Cheruiyot et al., 2009;

Mwangi, 2011; Oluyombo, 2016).

2.4.2 The Impacts of SACCOS on Clients’ Livelihood Improvement

Regarding impact of Saving and Credit Cooperative Societies; various literatures

 14

were reviewed. The study by Odoyo in Kenya reported that SACCOS enable the

members to meet the daily requirements of living including payment for school fees,

medical care, furniture and household items (Odoyo, 2012).

Study conducted in Ethiopia by Sebhatu, (2012) revealed that the impact of

participation in SACCOS on members' assets indicated that 62.5% of the sampled

respondents could made additional assets creation in the form of construction of new

houses, repairing old ones, livestock purchase like sheep, goat, cow, oxen, donkey,

chicken and purchase of household equipment like tape recorders, radio, television,

chairs, and tables (Sebhatu, 2012). They also recommended that SACCOS contribute

in reduction of poverty, through mobilization of members to engage in productive

activities so as to generate income, create employment opportunities, stimulate the

economy of a well-defined area and thereby improve their livelihoods situation

(Sebhatu, 2012). Nnynja also indicated that about 31.5% of the borrowers had

additional assets worth more than 1000 Birr (More than 80,000/= Tanzania

shillings). A study in Uganda reported that the access to financial services enables

households to invest in education, start or expand a business, or invest in agricultural

inputs. With SACCOS, the key potential linkage between access to financial services

and increase of household wellbeing is vital for economic growth among locals or

SACCO’ members (Nnyanja, 2017).

A study in East Africa by Lemma et al., (2010) done in Kenya and Tanzania showed

that SACCOS' services enable households to invest in activities that are likely to

contribute to higher future income and, therefore increasing household income and
 15

living standard of members. There were remarkably similar levels of saving and

borrowing in Kenya and Tanzania, with just over 70% of the population saving or

borrowing in both countries, despite significant differences in the availability of

financial services in the two countries. When comparing these two countries, the

study reported that Kenyans both borrowed and saved slightly more than Tanzanians

(Lemma et al., 2010). A study in Kenya found that 44% of those surveyed had at

some point used savings to undertake productivity-enhancing investment (Ellis et al.,

2010).

A study conducted in Nairobi Kenya by Mwangi (2011) showed that SACCOS

contributed in loan provisions to its members and encouraged borrowing. They also

reported that majority 87.7% of the SACCOS’ members improved their wellbeing

through SACCOS (Mwangi, 2011). Thus, SACCOS have a significant role in loan

provision to its members and in encouraging borrowings.

Study in Tanzania by Churk (2015) found that majority (53.7%) of the respondents

perceived that no benefit was obtained for being a member or non-member of

Muvikima SACCOS, 23.2% benefited only by doing saving in their SACCOS

account due to the fact that there was no other financial service provider in the area,

and 23.2% acknowledged that SACCOS benefited them through adding capital to

their small-scale businesses and agricultural activities (Churk, 2015). Also, Mebane

(2013) found that SACCOS in Tanzania have increased the saving for rural

household for about 30 million Tanzanian Shillings in the study area.

 16

2.4.3 The Challenges Hindering Impact Realization for SACCOS’ Clients

Challenges of the SACCOS basically depend on ability, knowledge and skills of the

members on financial management and entrepreneurship. Different challenges have

been reported by different authors and these can undermine or affect potential

member to join SACCOS (Shekilango, 2012).

Some studies in developing countries particularly in Africa, For example, Magali

(2013), Mwangi and Ombui (2018) indicated that SACCOS failed to attains the goals

due to corruption and embezzlement of funds, competition from well-established

banks, political interference, defaulting of loans and lack of qualified personnel

(Magali, 2013; Mwangi and Ombui, 2018).

Other major challenges of SACCOS as reported in Kenya includes limited product

diversity, inadequate governance and management, unfavorable image, lack of

performance standards and weak official supervision and regulation (Mumanyi,

2014). It was also found inadequate technical skills for both at board and

management levels resulted into failure to run SACCOS and members lost their

expectations. This corresponding to the study by Korir (2008) which reported that

about 54% of respondents had poor savings mobilization that contributed to delay in

payment of loans, as most of the times, SACCOS do not have enough savings to pay

loans to its members.

The study in Tanzania by Churk (2015) also indicated that loan repayment was a

major challenges of SACCOS members. The study highlighted that some members
 17

found their harder after joining SACCOS compared to the time before they joined the

SACCOS. This was because sometimes they have to take some amount of their loans

to repay back the multiple loans for the fear of losing their assets pledged as

collateral; and therefore some members withdrew from SACCOS and non-members

regretted to join the SACCOS due to fear (Churk, 2015).

2.5 Research Gap

Previous studies in Tanzania on impact of SACCOS did not combine the variables of

the impacts and challenges facing SACCOS. Therefore, this study helps to fulfill the

identified gap by assessing the experience of SACCOS’ members on the impacts of

SACCOS. The current study also assesses the challenges which reduce the impacts

of SACCOS in improving the wellbeing of the clients. To the best of our knowledge,

none of the previous studies assessed comprehensively the mentioned variables,

especially in Moshi district.

2.6 Conceptual Framework

Framework described the logical structure of meaning that guide the development of

the study. It bases on the identification of key concepts and the relationships among

those concepts. The Conceptual framework consists of concepts that are placed

within a logical and sequential design. The purpose of conceptual framework is to

clarify concepts and propose relationships among the concepts in a study, to provide

contextual interpretation of the study findings and to encourage theory development

that is useful to practice (Adom et al., 2018). In this study, the researcher tried to

describe the logical network to show the relationship of the research problem. There
 18

conceptual framework describes ways through which SACCOS improve the clients’

wellbeing; obviously through borrowing and investments which ultimately reduces

poverty for clients. Figure 2.1 shows that the livelihood for SACCOS’ clients can be

improved in the following ways:

i) Investing in the immediate future income generating activities through business

and consumptive spending with scope for productivity through adding and

gaining assets which retain value such as refrigerator, sewing machines or houses

themselves.

ii) Investing in human capital, such as own and children education or household

health and nutrition.

iii) The use of the borrowed money for the purpose of diet improvements, personal

savings for countering emergencies or future investment. These are the potential

on increasing household income but may be hindered by various ‘external

factors.
Dependent Variables
Independent Variables
IMPACTS OF SACCOS
SACCOS services
• Food adequacy
• Savings
• Assets increase
• Credits
• Crop productivity
• Shares
• Improve of education
and health
• Increase of business
capital

Figure 2.1: Conceptual Framework Of Poverty Reduction Through SACCOS

Source: Modified from Mwanga (2016)

 19

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Overview

This chapter highlights the methodological details appropriate for the study. The

sections consist of the study area, study design, data collection methods, sampling

procedures, data management and analysis plan, and research ethics.

3.2 Study Area

The study was conducted at KKIKALORA SACCOS with registration number KRL

684. Since its establishment, it has a total of 655 members of which 304 male, 275

female and 76 sub-groups. The dominant ethnic group at the site are Chagga people

who engage in different economic activities mainly agriculture and small business.

Main crops cultivated include coffee, maize, beans, and banana which most of them

are sold to Dar es Salaam and in Kenya via Taveta and Holili borders. In livestock

they keep cows, sheep, pigs, hens and ducks all these livestock except pigs are

consumed within the village but most of the pigs are normally transported to Moshi

Urban, Arusha and Dar es Salaam for sells.

KKIKALORA SACCOS is located at Kariwa village in South Uru wards in Moshi

district council. It operates under community based Mawella Vocational Training

Centre. The site is bordered by Sokoine road, Mshikamano and Tadei roads in the

east of Mwenge Catholic University, enclosed to Ushirika wa Neema in the Southern

Part, down the slope of Mount Kilimanjaro near Kariwa SDA Church.
 20

3.3 Research Design

This was analytical cross-sectional study design comprises of mixed methods

(quantitative and qualitative data collection techniques) from April 2019 to August

2019. This design was appropriate in this study because of its ability to offer the

researcher the opportunity to explore understandings and experience on contribution

of SACCOS and existing challenges. In addition to that, the use of qualitative offers

flexibility in collecting the vast amount of data aiming to get deep information from

the study participants.

3.4 Estimation of Sample Size

Sample is representative of the study population. The sample must be reasonable

enough to avoid sample error. It has reported that nearly 90% of the participants

benefits from SACCOS, thus the sample size was obtained using precision approach

regarding single proportion using the following formula:

Whereby;

=estimated sample size

= Proportion of members benefits from SACCOS with an estimate of 90%

=Probability of non-beneficiaries from SACCOS, 1-P = 10%

=Marginal error = 5.5%

Therefore,
 21

An addition of 5% which is equivalent to 6 members was added for sampling error,

therefore a minimum sample size of 120 SACCOS members were enrolled in this

study.

3.5 Sampling Procedure

3.5.1 Sampling for Quantitative Data

Sampling is the systematic procedure of selecting a number of individual for the

study in such a way that, individual selected represents the large groups from which

were selected (Phrasisombath, 2009). The aim of sampling is to get information

concerning the entire population and to minimize expenses in terms of time and cost

(Kothari, 2008).

A simple random sampling method was used to obtain the participants in the current

study. This was used to minimize biasness and improve representativeness of the

sample to be undertaken through ensuring diversity of members according to

location, education level, and gender and other demographic characteristics and use

of triangulation in data collection methods and sources of data.

Purposive sampling procedure was used to get representative of people with physical

disability using the qualitative method while a random selection of the other

participants was also used to get representatives for quantitative part.

3.5.2 Sample Size for Qualitative Data

A sample of 14 members (4 women, 4 men, 4 youths and 2 men with physical

disabilities) who were selected purposively with aim of identifying their experiences
 22

on impacts or contribution of SCCOS in women, male, youths and people with

physical disability. The exact number of participants was determined by the level of

saturation reached, with few more clients interviewed after saturation to check if no

new information has generated. We advocated for heterogeneous groups. However,

the standard criterion is that: The focus groups should capture diverse opinions, and

that participants should be able to present their perspectives free from the fear

(Kothari, 2008).

3.6 Data Collection Techniques

Data collection is the process of gathering and measuring information on variables of

interest, in an established systematic approach that enables one to answer stated

research questions, test hypotheses, and evaluating the study outcomes (Kothari,

2008). The researcher sought from the members, if SACCOS were playing their roles

in providing loans and probably adopt strategies that are geared to encourage

borrowings. Using questionnaires, the respondents were required to fill in relevant

questions that aimed at assessing the role of SACCOS in poverty reduction, loan

provision and encouraging borrowing, areas of achievements and challenges.

3.6.1 Quantitative Data

Self-administered questionnaires were used to obtain the quantitative data from the

participants. The collected data included socio-demographic data, economic

activities, saving habits, loan and borrowing habit and achievements and challenges

related to SACCOS. The participants were informed about the study and asked for
 23

their voluntary participation by filling in the questionnaires which were randomly

distributed to the participants.

3.6.2 Qualitative Data

Focus group discussion guides was employed to obtain the qualitative data. Focus

group discussion guideline was used to collect data from women, men, youths and

people with physical disability. The guides had questions related to contribution and

challenges of SACCOS for women, men, youths and people with disabilities. The

discussion guides were initially written in English and later translated into Swahili,

the National language that is widely spoken by all Tanzanians.

Four focus group discussions were conducted. The groups ranged in size of 2 to 4

participants each and lasted for 35-45 minutes. A total of 4 women, 4 men, 4 youths

and 2 people with physical disabilities were recruited in focus group discussions.

Focused group discussions were done in Kiswahili, the national language that spoken

by all participants and the researcher. Discussions were audio recorded with

permission from participants, so that no data was missed.

3.7 Data Quality Control

The term quality control refers to the efforts and procedures that survey

researchers put in place to ensure the quality and accuracy of data being collected

using the methodologies chosen for a particular study (Kothari, 2008; Levin and

Levin, 2014). In this study, the research assistants were trained on how to assure

quality of the data and they were oriented on the study tools. Free participation and
 24

data confidentiality were highly maintained. Researcher cross-checked all data

collected daily in order to make sure that all information is well documented. All

information from the fields were secured in the locked cabinet, and the database and

was secured by password for unauthorized personnel.

3.8 Variables and Measurement

The study variables included demographic variables (age, occupations, sex, marital

status, family size, level of income, number of children, education status), household

assets, economic status, food intake, household education background, health

services, and investment. Variables were measured regarding statistical level of

measurement nominal and scale (ratio or interval) for both independent and

dependent variables. Ordinal scale was subjected for categorical variables which

were grouped in ascending or descending with appropriate order such as level of

education. A quantitative variable has been entered into statistical package for the

social sciences (SPSS Version 23.0). These variables were manipulated and

categorized for the analysis purpose.

3.9 Data Validity and Reliability

In this study, pre-testing of research instrument was done to enhance validity and

reliability of data was measured through the Crobanch Alpha. The respondents'

results from pre-testing exercise were not included in the final analysis.

3.9.1 Data Validity

Validity is the degree to which the tool measures what it is intended to measure (Polit

and Beck, 2003). Content validity in this study was achieved by reviewing each
 25

question and providing opinion on whether the items covered the research objectives.

The opinions of the reviewers were compared and analyzed to determine the degree

of content validity. The validity was enhanced through pre-testing that included 10

members from ELCT SACCOS. Questionnaires were then reviewed on the basis of

the responses obtained from pre-test hence or otherwise adjustment was done to

increase the validity of the tool.

3.9.2 Data Reliability

Reliability is the degree to which an instrument measures the same way each time. It

is used under the same conditions with the same subjects (Polit and Beck, 2003). The

findings from pilot study were used to improve the study tool for the reliability of

data collected. The reliability of data was measured by using the Crobanch alpha and

scored 0.82 value signifying that data were reliable.

3.10 Research Limitations

The major limitation of this study was the lack of adequate funding which limited the

coverage of the intended sample size.

3.11 Data Analysis Plan

Data analysis refers to the systematically process involving statistical and/or logical

techniques to summarize, interpret and presenting the data findings (Celano, 2012).

There are two main approaches of data analysis techniques which are quantitative

and qualitative methods all can either employ computer or manual aids (Celano,

2012; Kothari, 2008). In this study quantitative and qualitative methods for data

analysis were employed.

 26

3.11.1 Quantitative Part

Quantitative data analysis was done with help of statistical package for the Social

Sciences (SPSS Version 23.0). Numerical data were summarized using mean and

standard deviation while categorical data was summarized using frequency and

proportions. Paired t – test was employed to measure the significance impact of

SACCOS on food adequacy at 5% level. P value less than 0.05 was regarded

statistically significant.

3.11.2 Qualitative Part

Process for thematic analysis was followed. Recorded audio voices were transcribed

by experienced transcribers to Swahili and then translated to English. After receiving

the transcripts, researcher listen several times the audio voice for each FGD against

the transcripts to ensure all information given by participants are reflected in the

transcript and also to familiarize with the data.

Analysis of data started once all 4 FGDs were completed in term of transcription and

re-listening of the recorded audios. Coding was done by researcher manually without

application of any software for qualitative analysis and qualitative expert went

through all transcripts to counter-check the coding. After being satisfied with coding,

then codes that reflected study objectives were sorted into categories and all

important categories according to study objectives were organized into themes that

included (business expansion, investment, saving and loans regularity with

reasonable interest rate. Also lack of knowledge in entrepreneurship and financial

management, failure to return loan on time, and misallocation of loans) that reflected
 27

both influence and challenges of SACCOS. Furthermore, the quotes that elaborate

the themes were captured with regards to impact and challenges of SACCOS. The

findings from qualitative data were presented using narrative method.

3.12 Ethical Consideration

The approval letter to conduct this study was sought from Open University of

Tanzania, and then the permission was obtained from the Chairman board of

KKIKALORA SACCOS, who informed the management team and its members for

the study concernment. Participants were informed of the full nature of the study

after which they signed informed consent to participate in the study. Privacy and

confidentiality were maintained during interviews and participant information was

maintained using participant ID. Participation into the study was voluntary basis and

participants were given right to withdraw from the study at any time without any

penalty. Data fabrication was assured by allowing additional answers from the

respondents. Plagiarism was cross-checked to assure that the research report

maintains originality.
 28

CHAPTER FOUR

RESEARCH FINDINGS AND DISCUSSION

4.1 Overview

This chapter consists of the presentation and interpretations of the results of the

findings from the study. The data analyzed in this section presents the characteristics

of the participants and the contribution of SACCOS in improving household

wellbeing. The findings were analyzed and presented following the study objectives

and the formulated research questions. Tables and figures were summarized to

simplify findings and discussion of the quantitative findings. The chapter also

includes the discussions of the key findings of this study in comparison to other

previous findings.

4.2 Quantitative Findings

4.2.1 Socio-Demographic Characteristics of the Participants

The mean age of the participants was 49 years with standard deviation of 12 years.

Majority 58.3% of the participants were females. More than two third (75.8%) of the

participants were married. About 46.7% had primary education or below. About

39.2% were farmers, 33.3% were business persons and 27.5% were employed. About

half (47.5%) had been members of KKIKALORA SACCOS for more than 5 years

(Please see details in Table 4.1).

 29

Table 4.1: Socio-Demographic Characteristics Of The Participants (N=120)

Variable N %
Age in years
20-34 13 10.8
35-44 28 23.3
45-54 44 36.7
55+ 35 29.2
Mean, (SD) 49, (12)
Sex
Male 50 41.7
Female 70 58.3
Marital status
Married 91 75.8
Single 14 11.7
Widow/divorce 15 12.5
Education level
Primary/below 56 46.7
Secondary 36 30.0
College/University 28 23.3
Occupation
Farmer 47 39.2
Business 40 33.3
Employed 33 27.5
Size of household
1-4 65 54.2
5 55 45.8
Experience at KKIKALORA
SACCOs
1-2 28 23.3
3-5 35 29.2
>5 57 47.5

The demographic variables’ results indicate that KKIKALORA SACCOS attracted

various groups of society members to join it. It may imply that there were no

restrictions to join the SACCOS provided that the new potential members fulfill the

general requirement such as paying for the entrance fees and buy shares. Moreover,

the data may imply that, probably the clients were benefiting with SACCOS and

hence attracted new members to join it. Likely the study by Sebhatu (2012) in

Ethiopia indicated subsequent increase of members, saving, accumulation of loan

and better returning habit.

 30

4.2.2 Beneficiaries from Services Provided by SACCOS

Regarding beneficiaries from KKIKALORA SACCOS, all participants had saving

accounts. About 76.7% were having shares, 71.7% received training about

entrepreneurship and investments. Majority of the participants 65.8% already

received loans. About 46.7% of the participants were facilitated to get health

insurance (Figure 2).

Figure 4.1: What Services Do You Get From SACCOS? (N = 120)

The findings indicate that SACCOS play important roles by providing the essential

financial services. Our findings correlates with study conducted by Bailey (2001)

who revealed that SACCOS offer the following products to their members: shares,

savings, loans, life deposits and funeral insurance. Most social welfare indicators

cannot be improved if there is limited access to financial services. Subsequent loans

determine ability of the members in saving, accumulation of loans and returning

habit (Ng’ondi, 2013). The study in Ethiopia on impact of savings and credit

cooperatives reported that contribution of SACCOS in poverty reduction depends on

the number of active members, loan size, number of saving clients, volume of saving,
 31

percentage of loans to clientele below the poverty line, percentage of female clients,

range of financial and non-financial services offered to the poor, the level of

transaction costs levied on the poor and the extent of client satisfaction with respect

to financial services have also some implications on the effectiveness of SACCOS on

poverty reduction (Sebhatu, 2012). In order to provide the conducive environment of

borrowing SACCOS have to create an avenue to enable efficient utilization of the

borrowed funds (Zikalala, 2016).

4.2.3 The Influence of SACCOS Services on Clients Assets

The result indicates the average number of assets before and after joining the

SACCOS was and 4 respectively. This implies that after joining the SACCOS, client

can double his/her assets through loans was used as capital to majority of the

KKIKALORA SACCOS members (Figure 2.2).

Figure 4.2: The Influence of SACCOS Services on Clients’ Assets (N=120)

The study in Ethiopia by Sebhatu (2012) revealed that SACCOS has increased

individual assets by more than sixty percent. The identified increased assets included

livestock purchase like sheep, goat, cow, oxen, donkey, chicken and purchase of
 32

household equipment like tape recorders, radio, television, chairs, and tables.

Likewise, in the current study we found that these were the common assets reported

by the participants. Another study in Uganda also reported that SACCOS promoted

the access to financial services and increase of household wellbeing (Nnyanja, 2017).

This implies that loans from SACCOS have promoted the assets increase for

majority of members.

4.2.4 The influence of SACCOS Services on Education and Health

Majority 56.7% of the participants used loans from SACCOS for education cost i.e.

payment of the school fees. The result shows an increase of an additional cost for

education by 0.7% after one joining the SACCOS.

Table 4.2: The Influence of SACCOS Services on Education and Health (N=120)

Services Number (%) Average amount

(Tsh.)
SACCOS services on education
Education cost (payment for the school fees) 68(56.7)
Average amount spent for school fees after joining 2,890,000
SACCOs
Average amount spent for school fees after joining 2,910,000
SACCOs
Additional amount increased for education cost after 20,000 (0.7%)
joining SACCOs
SACCOS services on health
Health insurance before SACCOs 48(40.0)
Health insurance after SACCOs 61(50.8)
Average amount of money saved for medical cost before 312,000
the SACCOs (n=45)
Average amount of money saved for medical cost after 318,000
the SACCOs (n=46)
Amount decreased from medical cost after SACCOs 6000 (1.9%)

Regarding health services, SACCOS facilitated members to have health insurance

because before joining the project, only 40% of the members had health insurance
 33

but after the joining SACCOS; there was an increase to about 50.8% of the members

who reported to have health insurance. The result also showed 1.9% increase in

amount of money saved for medical cost after joining SACCOS (Table 4.2 above).

Education plays a good role in increasing awareness of individuals and hence being

useful in economic production such as in agriculture, mining, business and

investment; meaning that also education offered through SACCOS, contributed

positively on social and community development of clients.

In the current study we found that majority of the clients used loans from SACCOS

for education costs such as payment of the school fees and accommodation to their

children, and about half of the beneficiaries from SACCOS reported that their

children received better education due to loans they borrowed from SACCOS. This is

supported by the study in Kenya by Odoyo (2012) who reported that SACCOS led to

improved health, education, social life, and good environment, spiritual and political

conflicts.

Similarly, the study in Ethiopia and other African countries revealed that SACCOS

has been a framework for investment at the level of the individual (Gasper, 2013;

Krantz, 2001; Sebhatu, 2017). The findings correspond to the current study which

indicated that SACCOS have positively influenced the availability of health services

whereby it was reported that SACCOS sensitized about 11 percent of its members to

get health insurance. We also found an increase in amount of saving by 19 percent

which helped significantly to cover the medical cost.

 34

4.2.5 The Influence of SACCOS Services on Food Adequacy

Before joining SACCOS, the average number of meals for the SACCOS client was 2

times per day but after joining the SACCOS the average number of meals was

changed to 3 times per day. There was also a unit increase in improved diet from 3 to

4 times per week. Both showed significant increase in number of meals and

improved balanced diet among the participants P<0.0001 (Table 3).

Table 4.3: The Influence of SACCOS Services on Food Adequacy (N=120)

Variable Average number of Statistical
meals/balanced diet estimate
Before SACCOS After SACCOS Mean t-test P-value
difference
Number of meals 2 3 1 7.671 <0.0001
per day
Balanced diet per 3 4 1 8.956 <0.0001
week

Regarding the influence of SACCOS on food adequacy, we found positive increase

in diet intake per day including number of meals per day. There was a declining of

missed meals per day after joining the SACCOS. The findings of this study indicates

that SACCOS played important role in promoting food adequacy and quality,

contrary the study in Kenya, which reported that that financial services did not have a

significant impact diet improvement (Cheruiyot and Ogendo, 2012).

4.2.6 The Influence of SACCOS Services on Business Capital

In regards to business capital, about 41(34.2%) of the participants started

business/investment using their loans from SACCOS. The findings show that

17(41.5%) use the loan for farming, 8(19.5%) used for house construction, 2(4.9%)

bought three tire motorcycle, 2(4.9%) bought motorcycle, 2(4.9%) bought

 35

plot/compound, 1(2.4%) bought a car for business and 9(22.2%) used their loans to

established small businesses including shops, market and stationaries (Table 4.4).

Table 4.4: The Influence of SACCOS Services on Business Capital (N=120)

SACCOS services on business capital n %
Started business/investment using loans from 41 34.2
SACCOS
Type of business (n=41)
Bought Three tire motorcycle 2 4.9
Bought motorcycle 2 4.9
Bought plot/compound 2 4.9
House constructions 8 19.5
Cash farming 17 41.5
Bought a car for business 1 2.4
Other business 9 22.2

Consistency with the study, Lemma et al. (2010) found that SACCOS enabled

households to invest in activities that were likely to contribute to higher future

income and, therefore increasing household income and living standard of members

in Tanzania and Kenya. Alike other study by Ellis et al. (2010) reported that

SACCOS strengthened productivity and raised business capital and investment to its

members (Ellis et al., 2010). Our findings contrary with Churk (2015) who reported

that majority of the respondents did not benefit from their SACCOS in Tanzania.

The current study identified some negative impacts or challenges of SACCOS in the

community; these include lack of knowledge in entrepreneurship and financial

management, failed to return loan on time, and misallocation of loans. The group of

women also reported the effect of failure to return loan on time, they reported that

sometimes it is dangerous when failure to return loan on time and may result into

loss of resources and assets. Likewise, the group of men during discussion also
 36

reported that because they lacked knowledge on entrepreneurship and investment,

some failed to repay their loans on time. The challenges of loan repayment has been

reported by many scholars such as (Magali, 2013; Mwangi and Ombui, 2018) to list

a few. The studies identified other challenges which SACCOS face. These include:

corruption and embezzlement of funds, competition from well-established banks,

political interference, loan default and lack of qualified personnel. Mumanyi (2014)

that reported that SACCOS in Kenya faced the challenges of inadequate technical

skills, both at board and management levels.

4.3 Qualitative Results

Four focus group discussions were conducted. The groups ranged in size of 2 to 4

participants each and lasted for 35-45 minutes. A total of 4 women, 4 men, 4 youths

and 2 people with physical disabilities were recruited in focus group discussions. The

following paragraphs present and discusses the results obtained from qualitative

analysis which aimed to assess the role of SACCOS on for women, men, youths and

people with disabilities.

Systematic and continuous services provided by SACCOS reported by members to

have contribution in raising their life standards. Group discussion participants

exposed the strengths of SACCOS in improving their livelihoods including business

expansion, investment, saving and provision of loans with reasonable interest rate.

clients reported to use loans for house constructions, payment of the school fees,

buying vehicles, and agriculture and poultry production. The following statements

were reported:
 37

4.3.1 Impacts Realized by Women group

Through SACCOS women became more powerful and supportive to family

members, as majority of women use the loans from SACCOS and start their small

businesses like restaurants, small marketing, and shops. These lead many women to

raise their income and support family needs when either husband cannot stand alone

or to help the family. This has reduced dependence in their families.

I have two women (friends) of mine who now own medium business
through SACCOS. Before SACCOS women were just practicing in local
rotatory savings known as KIBATI which lacked adequate capital and
security for their money but now through KKIKALORA SACCOS it
become easily for them to maintain financial stability through business
transactions and assets’ purchase. Majority of women have benefited
from SACCOS by supporting the academic achievement for their children
(FGD #1.....women)

4.3.2 Impacts realized by men group

Men reported that sometimes due to SACCOS, they are able to get better life because

they use loans from SACCOS as their capital for investments. During the focus

group discussion, men group reported the following:

‘Honestly, I found very difficult to expand my capital before joining

SACCOS, I started my own poultry 1 year before joining SACCOS but
definitely, I failed to progress. One of my friend advised me to join a
SACCOS and after three months, I managed to borrow a loan of 6
million and I used the loans to re-establish my poultry keeping activity
and now I sell about 1000 eggs every-day and I recently get a loan of 35
million to expand my poultry business’ (FGD # 2.....men)

4.3.3 Impacts Realized By Youths’ Group

On the youths’ side; despite of acknowledging the important of SACCOS but they

perceive that the interest rate for loan is high, in a sense that that majority of them

fail to pay back their loans on time. However, some have benefited through their
 38

SACCOS because some of them reported to buy Motorcycle and three tire

motorcycle (known also as Bajaji in Swahili language).

“Most of the time youths are eager to establish their businesses and
investment to raise their future life standards, but the problems are
capital. SACCOS provide loans to active members but the interest rate is
not friendly by many youths and some refuse to take loans because of
fear. However, I see this as negative perceptions because I bought my
motorcycle through loan and now, I own 3 motorcycles for business. I am
now planning to take other loan by next year to buy another three-tire
motorcycle, because I was encouraged by my fellow youth who borrowed
loan from SACCOS and bought two tire motorcycles and managed to
repay the loan on time. So, SACCOS is an important source of capital for
all, including youths.... (FGD3#.... youths).

4.3.4 Impacts Realized by People with Physical Disability

People with physical disability also reported that SACCOS was the only source of

capital for majority. However, it was a challenge, if one has not selected the proper

investment or type of business. When People with physical disability borrowed from

SACCOS, the loans helped them to engage in businesses and other economic

activities as physically abled clients do:

“With KKIKALORA SACCOS, I am now working and run my regular job

as a shoe maker and shoe shine, I also run other businesses at my
working place and I have been able to take my kid to private school.
Before joining SACCOS, it was too harder for me to run any business
because I lacked capital. This made my life to be tough because of high
cost for house rent and could not manage to buy materials required for
my businesses. However, when I joined the SACCOS in a year, I got a
loan of 2 million and I used it to reestablish my office and my business.
Currently, I am proud of my SACCOS, because it provided loan to me
and it has improved my living standards …… (FGD 4#...... people with
physical disability).

4.4 The Challenges of SACCOS in the Community

Apart from listing the importance of SACCOS; participants highlighted some

challenges which faced them while participating in SACCOS’ activities. These

 39

include lack of knowledge in entrepreneurship and financial management, failure to

return loan on time, and misallocation of loans.

"Despite education being a pillar of our SACCOS but majority of clients

lack information on financial management and entrepreneurship. This is
because most of the time we usually asked to takes loan for our business,
farming and investment. However, some take these loans for other social
activities that some of them are not productive as a result fails to return
loan on time” (FGD # 3.....youths)

Women also reported to fail repaying loan on time and due to that reason, most of

them hesitated to borrow loan because they perceived that is becomes dangerous

when they failed to repay loans on time. It means that failure to repay the loans, led

to confiscation of assets pledged as collateral.

‘Land and properties of some members who failed to return loan were
sold (outcry market) and left them bankrupt, this discourage majority to
seek loans from SACCOS due to fear of losing their properties and assets
when it happened, they have not finished their debts. Some clients when
borrowed loan spend money unwisely and this threatened the loans’
repayment. Therefore, there is a need for education on financial
management, investment and entrepreneurship to promote repayment of
loans” (FGD # 1....women)

Men during discussion also reported that because they lacked knowledge on

entrepreneurship and investment and they get difficulties in alternation of their

savings and loans:

“We observed that, some members face difficulties in using their finance.
For example, some members have saved more than 3 million but they
hesitate to take loans due to fear of losing their properties. Therefore,
members who fear confiscation of assets prefer to save than to invest”
(FGD # 2.....men).
 40

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

5.1 Overview

This chapter presents the summary of findings, conclusion, recommendations,

contribution of the study to theories and direction for future studies.

5.2 Conclusion

Majority of the participants had shares, received training about entrepreneurship and

investments and ultimately received loans. All men, women, youths and disabled

group had benefited from their SACCOS. The result indicates ‘double’ increase of

assets after joining the SACCOS and about half of the beneficiaries from SACCOS

reported that their children received better education due to loans they borrowed

from SACCOS. Our findings indicated significant increase of meals intake per day

compared before joining SACCOS. It was finally found that SACCOS was used as

the source of business capital for its members. Participants reported to use their loans

from SACCOS to start business including motorcycles, cars, and farms. Despite

these strengths, our study identified potential challenges of the SACCOS’ members.

These includes, lack of knowledge in entrepreneurship and financial management,

failure to return loan on time, and misallocation of loans as the result some failed to

return loan on-time and some sold their assets for loan return.

This study concludes that SACCOS have positive impact on saving mobilization,

assets, education, health, business and investment. The study further reveals that

SACCOS have significant impacts on food adequate and diet improvement. Despite
 41

these strengths, there existing challenges that limit proper utilization of SACCOS

such as lack of knowledge in entrepreneurship and financial management, failure to

return loan on time and misallocation of loans for some members. SACCOS were

reported to be valuable to its members, whereas women, men, youths and people

with physical disabilities identified the strengths of their SACCOS. A systematic and

continuous services provided by SACCOS contribute in raising their living standards

including business expansion, investment, saving and provision of loans with

reasonable interest rate. Clients reported also to use loans for house constructions,

payment of the school fees, buying vehicles, and agriculture and poultry production.

5.3 Recommendations

5.3.1 Training SACCOS Members

The SACCOS’ management should assure continuous training for its members to

increase their skills and knowledge in entrepreneurship and financial management.

This will enable members to reduce their burden of failure to return loan on time and

misallocation of loans.

5.3.2 Government Stringent Supervision and Awareness Creation

Government should play a role in mobilizing people so as to reap the benefits from

SACCOS. At community level, a robust behavioral and communication change

strategies need to be developed for example, community mobilization for saving and

loans to raise awareness and utilization of SACCOS, and lifestyle modification

campaigns targeting to promote education via social media such as WhatsApp, face-

book, integral and twitter including offline and online fliers. This will help to reduce
 42

the existing challenges of SACCOS and hence increase the livelihood improved for

members.

5.4 Contribution of the Study to Theories

The findings of the study contribute to the agency theory. The agency theory

discusses the problems that surface in the firms due to the separation of owners and

managers and emphasizes on the reduction of this problem. This theory helps in

implementing the various governance mechanisms to control the agents’ action in the

jointly held corporations which also was reported in this study as the SACCOS

implement potential roles in controlling its agents for members in provision of loans,

return and business orientation for members towards improvement of livelihood

standard of living.

In addition to that, the relationship between agency theory and SACCOS, there is a

common bond for saving money together and from their savings make loans to each

other for provident or consumption and obtain other financial services which have

been reported by members. The SACCOS’ members used loans in business capital,

social activities like school and health services.

Moreover, the agency theory is relevant to this study as is helps to understand

challenges that surround ownership, contractual agreement, management

interrelationship between small business owners and SACCOS. It was noted that

SACCOS being an artificial person, interacts and enters into contracts with other

entities. This brings about an agency relationship between the SACCOS and the
 43

entities. However, this study did not analyze much the variables of the agency theory

and this is reserved for the future studies.

5.5 Direction for Future Studies

Different interventions at various levels of economic improvement may help to

reduce the challenges of SACCOS. The Current saving policies needs to accord more

attention to SACCOS and focus on education and training about SACCOS

operations, loans, shares and more importantly savings mobilization.

There is a need for observational studies in this area to identify other factors that

contributes to positive impacts in SACCOS. The study described the variation in the

level of saving and assets, but did not include other possible contributing factors for

improvement other than SACCOS. Future studies should focus to use more advanced

methodology such as SEM, study quantitatively and qualitatively in details on how

SACCOS have benefited various groups such as youths and people with disabilities

and why youths hesitate to borrow from SACCOS. Further studies should compare

the performance of SACCOS with other MFIs such as VICOBA and NGO MFIs.
 44

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 51

APPENDICES

APPENDIX 1: CONSENT FORM (ENGLISH VERSION)

Dear participant, be informed that Mr. Thomas Mallya student of the Open

University of Tanzania is doing research on the contribution of SACCOs in

improving household wellbeing. Your participation is very important for the success

of the study.

Confidentiality will be assured and the information provided during this interview

will be used only for the research purposes. Participation in this study will not affect

one’s membership or role in the KIKALORA SACCOS.

The purpose of this study is simply to gain a better understanding of the impacts of

the SACCOs service in the society, so that its efforts may be improved so as to better

serve its members. Therefore, we ask you to feel at ease and to provide frank and

honest answers without fearing any persecution or disclosure. Researchers are only

interested in analysis of collective feedback and not individual respondent

information.

This is voluntary participation

Participant Initial: ___________________

Membership No: ______________________

 52

APPENDIX 2: CONSENT FORM (SWAHILI VERSION)

A: FOMU YA RIDHAA YA MSHIRIKI

Mpendwa mshiriki, Mimi Thomas Mallya Mwanafunzi wa Chuo Kikuu Uria cha

Tanzania, ninnafanya utafiti juu ya mchango wa SACCOs katika kuboresha ustawi

wa kaya. Ushiriki wako ni muhimu sana kwa mafanikio ya utafiti huu. Kushiriki

katika utafiti huu hautaathiri uanachama wako au jukumu la KIKALORA SACCOs

katika utendaji wao.

Kusudi la utafiti huu ni kupata kufahamu mchango wa ushirika wa kuweka na

kukopa katika ustawi wa kaya au wanaushirika wake. Matokeo ya utafiti huu

utasaidia kuhimarisha juhudi za ushirika kukidhi mahitaji ya wanaushirika, ili

kuwatumikia wanachama wake kwa ubora. Kwa hiyo, tunakuomba kujisikia huru na

kutoa majibu ya kweli na ya uaminifu bila hofu yoyote. Majibu yako yatasaidia

kufikia malengo ya utafiti huu, pia taarifa hizi zitatumika kwa ajili ya mahitaji ya

utafiti tu!

Huu ni ushiriki wa hiari, kuwa huru kutoshiriki au kushiriki. Kama umehiari, naomba

usaini fomu hii ya ridhaa ili kukidhi vigezo vya ushiriki wako.

Vifupisho vya majina ya mshiriki: ___________________

Namba ya Uanachama: ______________________

 53

APPENDIX 3: QUESTIONNAIRE (ENGLISH VERSION)

Membership No: _______________

1. Gender of client i) = Female ii) = Male

2. Age of client: _________ (years)

3. Marital status (cycle to the correct response)

a. Single

b. Married

c. Widow

d. Divorced

e. Separated.

4. What is the size of your household? …………

5. Level of Education

a) Formal education

b) Adult education

c) Primary education

d) Secondary education

e) College

f) University

6. Occupation

a) Farming

b) Petty/small business ( )

c) Livestock husbandry

d) Wage employment
 54

7. Duration of membership in KIKALORA SACCOS (years) ________

8. Did borrowing of credit made improvement of your livelihood? (Yes/No)

Please give the details how borrowing of credits improved the following items

Item (s) Before project After the project

9.Annual family income ……………….TZS ……………………..
10.Crop production per acre ……………….. ……………..
for 100 Kg bags
11.Increase of assets Number of asserts Number of assets…
12.Number of meals Number of meals.........
Number of meals.....

13.Amount of money used to Tshs......................... Tshs.............

cover medical costs per year
(approximate)
14.Amount of money used to Tshs......................... Tshs.............
cover Education costs per year
(approximate)
15.Amount of money used to Amount used................TZS Yes or No.....
construction of a house Amount used...........TZS
16.Amount of business capital capital......................(TZS) capital ..................(TZS)

9. Mention the negative impacts of the SACCOS

…………………………………………….………………………………………

……………………………………………………………………………………

10. Write your recommendations which will help to promote the impacts of the

SACCOS

…………………………………………………………………………………………

…………………………………………………………………………………………
 55

APPENDIX 4: QUESTIONNAIRE (SWAHILI VERSION)

A: TAARIFA BINAFSI

Namba ya uanachama: _______________

1. Jinsia: i) = KE ii) = ME

2. Umri wa mshiriki: Miaka _________

3. Hali ya ndoa: Nimeoa/nimeolewa Sijaoa/sijaolewa Mgane/

Nimeachika

4. Kiwango cha Elimu: SijasomaMsingi Sekondari Elimu ya juu

5. Umewahi kupata elimu ya ujasiria Mali kabla au baada ya kujiunga na chama cha

kuweka na kukopa (KIKALORA SACCOs)? Ndiyo Hapana

6. Kazi yako kwa sasa: Mkulima Biashara Ufugaji Nimeajiriwa

7. Idadi ya watu katika kaya: ______ #Wakubwa (Miaka 18 au zaidi):___________

#Watoto (Chiniyamiaka 18):____________________

8. Una muda gani tangu ujiunge na KIKALORA SACCOS (miaka) ________

9. HudumazipiunazipatakatikaSACCOS hii? (wekaalamayavema √)

 Hisa---Idadi ya hisa ulizonazo _________ Kiasi cha pesa (Tsh.) ___________

 Akiba---Taja kiasi ulichowekeza kwenye akiba yako (Tshs.)___________
 Mikopo-----Kiasi cha mkopo ulichokopa mwaka uliopita

(Tsh.)_______________Taja kiasi cha madeni ya mkopo wako uliyoshindwa

kulipa kwa wakati (Tsh.)_________________

 BIMA -----Je, SACCOS inawapahudumazabima__________Ndiyo/Hapana

 56

 Mafunzo -----Taja aina ya mafunzo maalumu uliyopata katika ushirika wako

(SACCOS)

____________________________________________________________________

____________________________________________________________________

10. Je! Kukopa mikopo kulifanya kuboresha maisha yako? (Ndiyo/Hapana)……

11. Tafadhali onyesha jinsi mikopo ilivyoboresha vitu vifuatavyo katika kaya yako:

Vipengele Kabla ya kujiunga na Baada ya kujiunga na

ushirika ushirika

Eleza aina ya uwekezaji uliofanya baada

ya kukopa SACCOs
Mapato ya kila mwaka ya familia ……………….TZS ……………… TZS
Uzalishaji wa mazao kwa ekari / shamba ……………….. ……………..
Ongezeko la asset/mali Idadiyaasseti……. Idadiyaasseti…….
Idadiyamlokwasiku Idadiya mlo ......... Idadiyamlo .........
Kuongezeka kwa lishe - Mara ngapi
unakula mlo uliokamilika kwa wiki
Kiasi cha pesa kilichotengwa kwa ajili Tshs......................... Tshs.............
ya matibabu kwa mwaka
(takribani/kadirio)
Je, una BIMA yaafya? Ndiyo au Hapana Ndiyo au Hapana
Kiasi cha fedha kilichotumika kwa Tshs......................... Tshs.............
gharama za Elimu kwa mwaka
(takribani)
Kiasi cha fedha kilichotumika kwa ajili Kiasi Kiasi
ya ujenzi au ukarabati wa nyumba kwa kilichotumika...............TZS kilichotumika.........TZS
mwaka
Kiasi cha mtajiwabiashara Mtaji......................(TZS) Mataji .................(TZS)

MAFANIKIO YA CHAMA CHA KUWEKA NA KUKOPA (SACCOS)

12. Taja mafanikio ya chama cha akiba na mikopo katika jamii

i. …………………………………………………………………………………

ii. …………………………………………………………………………………
 57

iii. …………………………………………………………………………………

iv. …………………………………………………………………………………

13. Taja changamoto au mapungufu ya chama cha kuweka na kukopa katika jamii

i. …………………………………………………………………………………

ii. …………………………………………………………………………………

iii. …………………………………………………………………………………

iv. …………………………………………………………………………………

14. Toa maoni yako yatakayosaidia kuinua na kuimarisha utendaji na mafanikio ya

SACCO’s kwako na katika jamii inayokuzunguka

…………………………………………………………………………………………

…………………………………………………………………………………………
 58

APPENDIX 5: FGD GUIDE (ENGLISH VERSION)

FOCUS GROUP DISCUSSION (Divide into SACCO’s leaders, Men, youths,

women and people with disabilities)

1. What are impacts of SACCOS to the following group of people in the

communities?

a) Community (Mention the aids of SACCOS provided to the community and

amount given in Tshs)

b) Men

c) Women

d) Youths

e) People with disabilities?

Please list and explain

2. What are the negative impacts of SACCOS in the community to:

a) Community

b) Men

c) Women

d) youths

e) People with disabilities

3. What are your recommendations to improve the impacts of SACCOS?

 59

APPENDIX 6: FGD GUIDE (SWAHILI VERSION)

MAJADILIANO NA MAKUNDI MAALUM JUU YA MAFANIKIO YA

SACCOS (FGD)

(Majadilino haya yatahusisha viongozi wa SACCOS, wanaume, vijana, wakina

mama na watu wenye ulemavu)

1. Nini mafanikioya SACCOS katika jamii katika makundi yafuatayo ?

a) Jamii (Onyesha faida za SACCOS katika jamii na kiasi cha fedha

kinachotumika)

b) Wanaume

c) Akina mama/Wanawake

d) Vijana

e) Watu wenye ulemavu

Tafadhalitajanafafanua

2. Ninichangamoto au mapungufuya SACCO’s katika kuhudumia jamii katika

makundi yafuatayo?

a) Jamii

b) Wanaume

c) Wanawake

d) Vijana

e) Watu wenye ulemavu

3. Nini maoni au mapendekezo yako katika kuimarisha utendaji na mafanikio ya

SACCOS?
 60

APPENDIX 6: KKIKALORA PERMISSION LETTER