Financial Cooperatives in Tanzania: What Brings the Uniqueness and Satisfaction of Services Offered?

Abstract

Financial cooperatives have garnered significant attention from scholars and stakeholders due to their pivotal role in promoting financial inclusion. By offering affordable, accessible, and community-focused financial services, these institutions significantly help to bridge the gap in financial access, especially among marginalised and low-income groups. The study examined the services provided by financial cooperatives, their uniqueness compared to other financial institutions in promoting financial inclusion, and determined factors leading to the satisfaction of services offered to their members. The study utilised secondary data from the Tanzania Cooperative Development Commission (TCDC), which involved 884 licensed SACCOS, while primary data were collected from selected key informants. Descriptive, inferential (multiple linear regression), and content analysis were carried out in this study. The results show that the role of financial cooperatives in promoting financial inclusion includes providing investment opportunities through buying shares, accessing loans, saving money, and making deposits. Additionally, the study found that financial cooperatives are distinct in their role of promoting financial inclusion compared to other financial institutions in that they are closer to where people live, practising open and democratic member control, facilitating relationship lending procedures, fostering a savings culture, offering education and training, providing easy access to loans, and generating investment income to members in form of dividends. It was also found that SACCOS members are satisfied with the services offered. The factors influencing satisfaction include consideration of the economic status of SACCOS members, the capacity of SACCOS to provide services, the knowledge and trustworthiness of SACCOS employees, the knowledge and trustworthiness of SACCOS board members, and timely and affordable access to SACCOS services. The study recommends that SACCOS continue to maintain and improve service provision, thereby attracting more members of communities to join. Additionally, TCDC should continue to sensitise unlicensed SACCOS to address their challenges in the licensing process, so that they can get licensed. Non-governmental organisations should invest in training programs and infrastructure to help SACCOS adopt mobile and appropriate technology, thereby stimulating savings and easing the provision of mobile services.