Benson O Ndiege

The study examined the impact of capital structure on the performance of Savings and Credit Cooperative Societies (SACCOS). Specifically, the study examined how the sources of capital and how the allocation of SACCOS capital influences the performance of the SACCOS. Using secondary data of the SACCOS financial statements from Tanzania and, random effect regression model in the analysis, the findings reveal that higher net loan, liquid investment, members' savings and institutional capital are both crucial determinants of performance. Also, there was no evidence on the impact of leverage on the performance of SACCOS. Moreover, the findings indicated that allocating more resources into non-financial investments lower the performance. The study recommended that giving loans should be the major business of SACCOS. SACCOS should be encouraged to focus on extending financial services to its members who will invest, rather than SACCOS investing in non-financial investments. Also, members' savings and institutional capital should remain the primary financing instruments in SACCOS.

The study examined the causality between bank profitability and stability of commercial banks (CBs) in Tanzania using panel data covering 10 years (2006-15). Bank profitability was measured using Return on Assets (ROA) and Return on Equity (ROE) while stability was measured using Z-score and the ratio of Non-performing loans to total loans (NPL/TL). The study included 22 banks and employed Granger Causality Test in Heterogeneous Panels as a method of analysis. The findings revealed that there is a positive bidirectional relationship between ROE and Z-score in large and small banks. This implies that banks in Tanzania should strive to increase both ROE and Z-score since they cause each other. The study also found that ROE does granger cause the ratio of NPL/TL in small and large banks while the ratio of NPL/TL was found to granger cause ROA and ROE in small banks. This might be implying that loans are almost the only source of income for small banks that is why NPL/TL do cause their profitability. Hence, the study recommends that, small banks should be keener on how to manage their loans and should expand their activities to earn more non-interest income which would ensure their stability even when their loan portfolios are not performing well. The findings concerning ROA and Z-score indicated that there is a bidirectional relationship between ROA and Z-score in small banks. These findings imply that the profitability and stability in small banks do cause each other. Thus, the study recommends that the management of small banks should aim to accomplish both simultaneously as they cause each other.

While the issue of bank stability is being given more emphasis by most of banks' stakeholders worldwide, many developing countries are busy promoting policies which aim at increasing the level of banking inclusion in their economies. The main objective of this study was therefore to investigate the influence of banking inclusion on bank stability using 30 commercial banks (CBs) in Tanzania for the period 2006-2015. Banking inclusion was measured using the Index of Financial Inclusion (IFI) and bank stability was measured using Z-score and the ratio of Non-Performing to total loans (NPL/TL). Six control variables namely size, capital, liquidity, mix, Gross Domestic Product (GDP) and inflation were included in order to increase the predictability and to reduce the model bias. Method of analysis applied was Random-effects GLS regression model. Findings revealed that the degree of banking inclusion was negative but statistically insignificant influencing Z-score of both small and large CBs. Findings also revealed that the degree of banking inclusion was positive but statistically insignificant influencing the ratio of NPL/TL of both small and large CBs. These findings contradict the financial intermediation theory which impliedly suggests that greater banking inclusion causes credit and insolvency risk to decrease, thus improve bank stability. Since the study has concluded that a degree of banking inclusion has no influence on stability of CBs in Tanzania; the study therefore recommends to banks' management to increase their outreach in order to reap the advantages of banking inclusion such as poverty alleviation as this will not endanger their stability provided that the increase in inclusion is well planned and does not aim to compromise their credit evaluation standard.

Savings and Credit Cooperative Societies (SACCOS) are directly serving more than two million people in Tanzania; most of whom are from the low-income population. However, its sustainability remains questionable. This paper explored the role of members' participation in the sustainability of their SACCOS. The study used a qualitative case studies approach. This design was suitable for understanding the membership and sustainability as it helps to probe deeply by exposing participants to a real-life situation which otherwise is difficult. Data were collected from four (4) rural SACCOS based in Mpwapwa district in Dodoma (MDC, 2016), Tanzania using focus group discussion and interview methods and was analyzed using the content analysis. The findings of the study revealed that members' participation and the way SACCOS was formed are crucial in the sustainability of SACCOS. The findings too show that participation is determined by the way SACCOS was formed and commitments of members in SACCOS' activities which are; attending meetings, borrowing and saving money. Moreover, the results show that the conditions that limit the ability of a member to practice democratic rights are the major reasons for poor participation and sustainability in SACCOS. For instance, the wider coverage area for SACCOS' operations and cooperative education were identified were important factor which influences members' participation in SACCOS activities. Thus, to improve sustainability in SACCOS the focus should be on strengthening member's participation through promoting close membership which will enhance the democratic process in SACCOS.

The paper presents prospects and challenges of the collective action in facilitating access to financial services among smallholder farmers in rural areas. It is based on data collected through Focus Group Discussions (FDGs) from 11 cases of Savings and Credit cooperatives (SACCOs), Primary Agricultural Marketing Cooperatives (AMCOS) and Farmers Associations (FA) in Dodoma and Morogoro regions in Tanzania. By using the content analysis, the paper presents three major findings. First, the groups are much relevant in strengthening the ability of the smallholder farmers to access financial services. Second, The majority of smallholder farmers rarely payback their loans obtained through wholesale borrowing. Thus, wholesale group lending results into ineptness which leads to debt frightening. Failure to repay their loans increases financial burden as interest and fine enlarge the loan size. Consequently, frightening cooperation and sustainability of groups and deepening poverty among smallholder farmers. It was further observed that, the main reason for poor repayment of the loans is poor group lending implementation arrangements. Thus, the paper proposes the implementation arrangement of the wholesale lending method that would reduce financial risks and ensure sustainability of the groups.

The Savings and Credit Cooperative Societies (SACCOS) which are cooperative financial models are flourishing in most of the developing economies recently. However, loan repayment capacity remains a challenge that threatens their future. Using financial statements data for the year 2012, from 36 SACCOS in Kilimanjaro Region, Tanzania, and using descriptive statistics and regression models in the analysis, this study examines the relationship between financial performance and loan repayment capacity. It thus examines the extent by which SACCOS are capable of recovering the loan issued and also the financial ratios that explain loan repayment capacity in SACCOS. The study depicts that there is a severe financial risk management problem among Tanzanian SACCOS. Focusing on sustainability is significant for improvements of loan repayment, but focusing on profitability in SACCOS results to an adverse loan repayment. The study asserts that the primary focus of SACCOS should not be profit but member's wealth maximization and sustainability of the institution. Moreover, we suggest that in addition the traditional means of dealing with financial risk, the uses of a modern risk management tool like credit scoring should be considered in evaluating borrowers.