The Impact of Performance in Savings and Credit Cooperative Societies on Poverty Reduction in Tanzania:

Abstract

This study investigates the impact of Savings and Credit Cooperative Societies (SACCOS) on poverty reduction in Tanzania, specifically focusing on Tanga City Council. The research aimed to assess the relationship between loan portfolio quality, savings mobilization, financial sustainability, and profitability with poverty reduction, using both descriptive and inferential statistical methods. Based on the positivist philosophy, the study used a descriptive cross-sectional survey design and a quantitative research methodology. In order to assure representativeness, a sample size of 95 respondents that included SACCOS managers, loan officers, and members. The respondents were chosen using random sampling procedures and given standardized questionnaires to complete. With the aid of SPSS software, descriptive and inferential statistical techniques, such as multiple linear regression (MLR) and correlation analysis, were used to examine the gathered data. The analysis revealed a strong correlation between poverty reduction outcomes and loan portfolio quality, profitability, savings mobilization, and financial sustainability. The beneficial benefits of these financial determinants on reducing poverty were shown to be enhanced by financial literacy, which was found to be a crucial mediating variable. Again, the findings indicate that loan portfolio quality and savings mobilization have a measurable effect on poverty reduction. The results show that improving financial literacy among SACCOS members significantly enhances loan portfolio quality and savings mobilization, contributing to a higher rate of poverty reduction. Furthermore, financial literacy was found to play a crucial role in strengthening the positive effects of these variables on poverty alleviation, with the mediating influence leading to better financial outcomes for the members. The study concludes that SACCOS in Tanga City have a positive impact on poverty reduction through their financial services, particularly when members' financial literacy is improved. This suggests that SACCOS, combined with educational programs on financial literacy, can be a powerful tool in combating poverty. Future policies should focus on enhancing financial literacy to maximize the benefits of SACCOS in reducing poverty levels.