Impact of Saving and Credit Cooperative Societies in Poverty Reduction. Empirical Evidence from Tanzania

Abstract

The objective of the study was to examine the impact of Saving and Credit Cooperative Societies (SACCOS) in Poverty Reduction. The study was justified based on the fact that poverty level and microfinance services change continuously and therefore a lot remains to be desired. Descriptive as well as multiple linear regression methods were used in this study which involved a sample of 40 beneficiaries of microfinance services. Microfinance services and entrepreneurial skills were independent variables and poverty reduction was the dependent variable. Data analysis was done using Statistical Package for Social Sciences (SPSS). The findings revealed that microfinance services contribute 50 percent of poverty reduction indicating the strong impact of SACCOs in poverty reduction given that the loans are invested in income generating activities. SACCOs beneficiaries have experienced increased income, improved social services and self employment.  The study further revealed that SACCOs provide entrepreneurial skills although at a very small rate and the training provided meant to create member’s awareness of terms and conditions of loans and savings and not creating business skills. This study recommends that SACCOs need to ensure that microfinance services provision is expanded to include large number of clients. Furthermore, I recommend SACCOs to introduce entrepreneurial training to all members and ensure simultaneous provision of microfinance services and entrepreneurial skills for effective poverty reduction.

Keywords: microfinance services, entrepreneurial skills, investment and poverty reduction.