Indicative Factors for SACCOs Failure in Tanzania

Abstract

SACCOs are viewed as a feasible opportunity toward financial inclusion in an economy where most of the citizens are poor, as they are very essential for the socio-economic development of members, the community, and the world at large. However, SACCOs sometimes do not realize the expected socio-economic potential, especially when they fail. This study aimed to comprehensively assess financial and non-financial factors, at institutional and personal levels, that contribute to the failure of SACCOS in Tanzania. The data were collected using a questionnaire on 5,000 members of SACCOs, obtained using stratified random sampling. Data collected were analyzed using descriptive statistics and binary logistic regression. The findings showed that both financial and non-financial factors, at personal and institutional levels, had a statistically significant and positive relationship with the failure of SACCOs. Therefore, the performance of SACCOs and other Microfinance Financial Institutions (MFIs) should be addressed from a comprehensive view of both financial and non-financial factors, at personal or institutional levels. In other words, the failure of MFIs should be addressed from a holistic point of view.