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The saving and credit cooperative society (SACCOS) is a member based
organizations, established under Cooperative Act No 20 of 2003. The core duties
being to encourage saving and enabling members to obtain loans they may require
for various purposes. The study was aimed to examine the contribution of SACCOS
in financing paddy farming in Mbarali district. This is based on the fact that for
decades farming in Tanzania have been ignored and regarded as a risky business due
to its nature of depending on rain and its nature of cash flow. Research problem was
studied by using descriptive research design; the population of interest was the
SACCOS operating in Mbarali District. This study focuses only three (3) out of
eleven which are 30 % of active SACCOS in this district. The data was collected
through self-administered questionnaire for 98 respondents, interview, observations
and documentary evidence.
This study revealed that the financial services available for the farmers include
savings, credits, and deposits. The mechanisms used to deliver these services were
either direct or indirect through individual customers, group guarantee or wholesale,
and the service providers were SACCOS, microfinance institutions, and banks.
Through kilimo kwanza government established a special unit in financial
institutions for mobilizing and disbursing agricultural credit, increase allocation to
the Tanzania Investment Bank (TIB) agriculture window. Financial providers faced
operational risks, poor infrastructure, poor technology, and weak contract
enforcement. The farmers failed to enjoy the service due to unfavourable terms like
interest rate, collateral and lack of financial information.
Despite the challenges, this study revealed that the SACCOS played a very
significant role in financing paddy farming due to its customized services, reliability
and convenience. The challenges against the deliverance of financial service can be
solved by, improving the service delivery methodologies, and creation of favourable
operating environments. |
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