The Impact of Savings and Credit Cooperatives in Ofla Wereda Tigray Region of Ethiopia

Abstract

The present study primarily addresses the impact of Rural Savings and Credit Cooperatives (RUSACCO) on the income and family living conditions of members. The study was undertaken in Ofla Wereda Tigray Region of Ethiopia. Ofla Wereda is selected for the study purposively because of the availability of more number of SACCOs, with documented records. The survey was conducted during the year 2010 and a total of four SACCO with 168 members were analyzed. The study has adopted random sampling procedure for the selection of the members. The data analysis employed various statistical tools like correlation and regression. The correlation analysis reveals that the independent variables years of stay in the SACCO, savings, size of loan, and number of times loan availed have significant positive correlation with post income of the respondents. Similarly, there is significant and positive correlation between years of stay in the SACCO, size of loan, and number of times loan availed and profit from economic activities, while the variable savings has significant negative correlation with the profit.

The regression analysis reveals that the independent variables such as savings and number of times loan availed have significant positive relationship with the post income, while the variables education and years of stay in the SACCO have significant negative relationship with the post income, contrary to what was expected. Non members stated that no perceived benefits, lack of information and high interest on loan were perceived as problems of SACCOs.  Therefore, concerted efforts are needed to organize seminars and campaigns to create awareness about SACCO. Cooperative Extension Work is to be promoted to persuade the non-members to join SACCO.

Keywords: saving, loan, cooperatives, nonmembers, post income, profit, Ofla Wereda, Tigray Region, Ethiopia