A Study on Challenges and Opportunities of Rural Savings and Credit Cooperatives (RUSACCOs)A Study on Challenges and Opportunities of Rural Savings and Credit Cooperatives (RUSACCOs)

Abstract

Microfinance is a powerful strategy or instrument, among several others, for alleviating poverty in general and rural poverty in particular in developing countries.Rural communities in Ethiopia have difficulties in getting financial assistant from the formal financial institutions. Most of the rural people are depending on non-formal financial institutions and private money lenders for getting financial assistance. Moreover, they have been paying high interest rate for their loan amount. The study was conducted in Degua-Tembienworeda of Tigray National Regional State, Ethiopia. The main objective of the study was to identify challenges and opportunities of RUSACCOs. A three stage random sampling technique was followed to select study district, RUSACCOs and a total of 167 sample respondents. Both primary and secondary data were used to identify the problems and opportunities of RUSACCOs. Primary data was collected from the selected sample respondents by using a structured interview schedule. To address the objectives of the study, appropriate tools and techniques such as simple descriptive statistics, frequency, mean, minimum, maximum and percentage were applied.  It is found  that the  since joining in the RUSACCO only 41 respondents  constituting 24.55 percent of the respondents have taken loan from the RUSACCOs and the rest 126 respondents constituting 75.45 percent of the respondents  were not credit beneficiaries. The study results revealed that 70 respondents or 41.90 percent of the respondents have reported that the irregular general body meetings are the one of the main constrain to expansion of cooperatives. The major challenges identified based on the findings of the study were; Low participation of members in RUSACCOs activities, lack/shortage of professional skilled man power, limited loan amount available, lack of knowledge on income generating activities, shortage of auditors, weak management, limited training opportunities to RUSACCO members etc. and Some of the opportunities were;  presence of supportive governmental policies and strategies on RUSACCOs development, different infrastructure facilities, capacity building efforts by government, credit without collateral, low interest rate for credit beneficiaries, recruit professional skilled man power, support from different social organizations. Therefore, it is recommended that, the existing extension services should be strengthened in a way that working in harmony with pertinent officials to bring change for efficient and effective delivery of saving and credit services through RUSACCOs. Likewise, policy should account the flexibility of rules and regulations on savings and credit provisions to ensure sustainable development of rural community.

Key words: Challenges, cooperatives credit, Opportunities, savings