The contribution of savings and credit cooperative societies to income poverty reduction: A case study of Mbozi District, Tanzania

Abstract

This paper explores the contribution of Savings and credit cooperative societies (SACCOS) in reduction of rural households’ income poverty. Specifically, the paper looks at; activities undertaken by SACCOS that can lead to reduction of income poverty; comparing income levels between SACCO’s members and non-members; determining the impact of SACCOS to household’s income poverty reduction, and exploring community’s attitude towards SACCOS. A total of 160 respondents were involved in the study on which this paper is based; 80 SACCOS members and 80 non-members. Data were collected using a structured questionnaire, focus group discussions and key informant interviews. Quantitative data were analysed using SPSS where descriptive and inferential statistics were determined: qualitative data was analysed using content analysis. Study findings show that SACCOS perform different activities in the provision of financial and non-financial services to members. They provide shares, investment opportunities, savings, credit, and training on entrepreneurship skills. T-test analyses show a highly significant difference (p<0.001) between the two groups on income earned from agricultural activities and household expenditures; for the assets owned by household there was also a significant difference (p<0.05). Using MLR analysis, the impact of SACCOS to income poverty reduction was significant (p < 0.05). Generally, the respondents’ attitude towards SACCOS was favourable. The paper concludes that SACCOS play a significant role in improving the conditions of smallholder farmers. The paper recommends that SACCOS be empowered to enable them perform better and provide a range of services to members thereby helping beneficiaries to reduce their income poverty. Key words: Micro-finance institutions (MFIs), SACCOS, poverty and credit.