SOKOINE UNIVERSITY OF AGRICULTURE

COLLEGE OF SOCIAL SCIENCE AND HUMANITIES

DEPARTMENT OF DEVELOPMENT STUDIES

DEGREE PROGRAM; BACHELOR OF RURAL DEVELOPMENT

SPECIAL PROJECT PROPOSAL

TITLE: MICRO CREDIT-COOPERATIVE SOCITIES AND MEMBER'S

SUSTAINABLE LIVELIHOOD DEVELOPMENT; CASE STUDY MVOMERO SACCOS
TEACHER’S LTD IN MOROGORO DISTRICT

STUDENT NAME: ……………………….

REGISTRATION NUMBER: BRD/D/2018/0248

3SUPERVISOR: DR. J. J. RINGO

FEBRUARY 2021

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 CHAPTER ONE
1.0 INTRODUCTION
1.1 Background Information.
Co-operative Societies were created long before the advent of the fair-trade movement to help
workers improve their livelihoods and protect their interests. Co-operatives are organizations of
people who have the same needs (Wilhoit, 2005). Formal and Informal Co-operative
arrangements for social and economic purposes have existed for a long time. Historically, formal
and successful Co-operative emerged in the 19th Century when the Rockdale Pioneers established
their consumer Co-operative in 1844.

A Savings and Credit Co-operative Society (SACCOS) is a democratic, member-driven, self-

help financial Co-operative. It is owed, governed and managed by its members. Generally, the
idea behind establishment of SACCOS is to promote savings and make credits available to the
members. SACCOS are the important micro-financing institutions for mobilization of financial
resources for various development activities. Co-operatives are formed to meet peoples’ mutual
needs. They are based on the powerful idea that together; a group of people can achieve goals
that none of them could achieve alone. SACCOS play a critical role in entrepreneurship
development, through the delivery of, responsive, affordable and market oriented financial
services tailored to the specific needs of their members.

Also SACCOS according to Anania and Hall,(2015) .the saving and credit cooperatives societies
(SACCOS) are financial co-operatives that aim at meeting the financial needs of all members
men/women ,old/young ,rich and poor in particularly by encouraging saving and grating loans to
the members.it belongs to its members who manage it democratically they play important role in
socio-economic development of members and communities.

1.2 Problem Statement

SACCO’s services in Tanzania is not clearly known which includes the range of rural SACCOS
credit, saving mobilization and entrepreneurial skills that has enabled growth of investments,
income, self-employment and improved social services. Previous studies .According to (Churk,
2017) conducted in Tanzania on the impact of Rural Co-operatives in poverty reduction and
sustainable livelihood development focused on livelihood poverty reduction where by the study

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was conducted in Mufindi district .the study examined the contribution of Savings and Credit
Co-operatives societies (SACCOS) In promoting rural livelihood in Makungu ward ,Mafundi
district. where different research methods have been used to help the collection of data in
Mufindi ward and it have been found that SACCOS have played minimal role toward promoting
rural livelihood in the study area, the feature or thing that make poverty to persist to the
community members is majority of SACCOS members failed to repay back the loans due to high
dependency on Agriculture sector which is not promising ,there was also partial involvement of
SACCOS members in planning and decision making something which lead inadequate
management of the Muvikima SACCOS for such matter it has recommended that for this
SACCOS to contribute effectively ,it should address the root causes of poverty including human
resource, inadequate physical capital, insufficient financial capital and support activities that
meet needs of rural people than concentrating in business only and also develop strategy the
extent these institutions have been able to provide credit accessibility to the beneficiaries
ignoring the social-economic outcomes of those savings, deposits and loans to the community

Tanzania uses Rural SACCOS as a strategy of eliminating poverty and ensuring sustainable
livelihood development in various communities .However, it has not performed creditably well
neither has not played the expected important and role in poverty eradication. Despite the
increasing number of Rural Co-operative institutions, poverty incidence remains to be a
challenge in the country, whereby 67.9 percent of the population is below the poverty line (WFP,
2019). Co-operatives are perceived as peripheral institutions with low contribution to the
economy. The challenges facing Co-operatives and the Co-operative movement at large have led
to loss of trust in the Co-operative business model, and questioning of the impact of
Cooperatives in Members’ sustainable livelihood development.

Currently, According to (Msuya,R.I,2020) .he has shown the way SACCOS has helped in the
poverty reduction according to the study conducted at rural Dodoma and Mwanza where the
study was conducted and the sample selected to present the population and comparison between
groups have been conducted and according to the study it ha been found the SACCOS have
facilitated in poverty reduction among the members so there is a need to innovate SACCOS and
keep providing SACCOS services since it has a great support in poverty reduction . any opinion
leaders and youth are debating on impact of Rural SACCOS towards improving socio-economic

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welfare of its members, leaving so many questions than answers as to how they contribute
towards poverty alleviation, and social welfare in particular (Ng’ondi,M., 2013) It has been
explained that microfinance and savings cooperatives are very important in the poverty reduction
process due to its accessibility. This play a great role since they offer opportunity to rural people
to get loans that facilitates their involvement into different activities for livelihood sustainability
as explained by Nnyanja, 2017 that the major role of SACCOS is to improving household
income a role which dominate among the roles observed. Others include credit service to
members, provision of investment service advisory to teachers and regular savings in terms of
depositing to the SACCOS which contribute to poverty reduction. The proposed research seek
to explore an understanding of the micro credit co-operatives and the way it can help members to
obtain sustainable livelihood development. Though some researches have been conducted by
some researchers I have observed that there is a need for making an assessment of the micro
credit cooperatives toward members livelihood sustainability because, despite the fact that we
have these Micro credit cooperatives, still many people are poor and indication of attaining
sustainable livelihood is not seen. The proposed study will explore and advice on what needs to
be done so as to attain sustainable livelihood.

So in Tanzania studies have mixed result on impact of SACCOS services on poverty reduction
for instance studies conducted by Goey,2012 and Churk (2015) in Dar es salam and Iringa
respectively indicated that, SACCOS services had no impact on household income On other
hand studies conducted by Kwai and Urassa(2015) as well as (Kihwele & Gwahula,2015) in
Mbozi and Dodoma district respectively conducted that SACCOS had positive impact on
household income.

So the studies based on the impact of SACCOS in poverty reduction and income
earning .because of the studies conducted previously the research gap observed is on the
assessment on how SACCOS leads its members livelihood sustainability.

1.3 Justification of the Study

The rationale of the study it provides us with the opportunity to see the benefit of coming up with
many micro credit co-operative to members sustainability. The study will also give the reason for
the failure of these micro –credit cooperatives as well as the need for the improvement of these

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micro-credit cooperatives. Potential contribution of rural Cooperatives in sustainable livelihood
development of its members, as well as providing clear suggestion on appropriate strategies to
adopt for SACCOS to remain relevant to the needs of their members.

The study is expected to help the policymakers, planners and development practitioners in rural
development. The information acquired in the study will be useful to Co-operative Development
Department and SACCOS, especially in strengthening consideration and support of the sector.
Moreover, the study will stimulate Co-operative support initiatives, SACCO’s education,
training and capacity building in various communities, and also stimulate the existing one to
ensure that they reach their goals but also the sustainability for the members are observed or
realized by members them selves this will add the chance for more joining in these micro credits
cooperatives.

The study findings also will encourage more formation and development of Rural Savings and
Credit Co-operative Societies across the country. Through this study Board of Directors and
Management of Various SACCOS are expected to develop sound strategies for Savings
Mobilization and adequate sustainability.
Also the study finding on the academic side will be useful to other researchers, scholars as the
reference and rise fresh perspective in academic field whatever they find the gap of knowledge
hence form a basis for further research.
Furthermore, help in bridging the gap of knowledge on SACCOS contribution in members
livelihood sustainability.

1.4 OBJECTIVE OF THE STUDY

1.4.1 General objectives
To examine Micro-credit co-operative societies and member’s sustainable livelihood
development in specifically Mvomero district in Morogoro

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1.4.2 Specific research objectives
Specifically the study aims at;
 Assessing the socio-economic characteristics of the members in Morogoro
Mvomero Sacco’s Teachers Ltd
 Determining members’ perception on the nature of Co-operative Societies in the
study area
 Examining the challenges experienced by Rural SACCOS and Micro-credit co-
operatives in their effort to improve and develop their members

1.5 Research Questions

 what motivate people joining micro -credit co-operatives and what discourage
them from joining SACCOS
 To what extent did micro -credit cooperative consider to be important by the
community members
 What is the impact of mvomero SACCOS teachers Ltd in livelihood sustainability

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 CHAPTER TWO
LITERATURE REVIEW
2.1 Conceptualization of concepts
2.1.1 Co-operatives
A Co-operative is "an autonomous association of persons united voluntarily to meet their
common
Economic, social, and cultural needs and aspirations through a jointly-owned and
democratically-
Controlled enterprise" (ICA, 1995), Also Cooperative; According to Sanborn and Cueva (2000), a helpful
is an association that gatherings together various people with the point of participating in a business
action whose task depends on the collaboration of every one of its individuals. It additionally focuses on
that this gathering tries to create benefits for individuals through the arrangement of merchandise or
administration

2.1.2 Sacco’s
A Savings and Credit Co-operative Society (SACCOS) is a democratic, member-driven, self-
help financial Co-operative. It is owed, governed and managed by its members. In Tanzania a
SACCOS is defined as “a credit society, solely, dedicated to the promotion of thrift among
members and the creation of a source of credit for them at competitive rates of interest through
financial intermediation” (URT, 2013). In other way saving and credit cooperative is the credit
cooperative society which encourage its members to save thereby accumulating and increasing
capital
Also SACCOS,implies an enrolled society whose main goals are to empower frungulity among
its individuals and make a wellspring of credit to its individual (URT,2013).

2.1.3 Member
A member is are user who has a right to vote on important affairs of the cooperative among the
important affairs are the election of directors, approval of articles and bylaws and approval of
mergers ,acquisition or are sell off of the entire cooperative .In most cooperatives voting is on a
democratic or one member, one vote basis.one of the responsibility of users is to help govern or
control the cooperative by voting on important issues person joining in the application for the
registration in a Co-operative or a person admitted to membership of a Co-operative after

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registration in accordance with the provisions of the Co-operative Act, 2013 and By-laws of a
Co-operative (URT, 2013).

2.1.4 Sustainable livelihood

A livelihood comprises the capabilities, assets (stores, resources, claims and access) and
activities required for a means of living: a sustainable livelihood is one which can cope with and
recover from stress and shocks, maintain or enhance its capabilities and assets, and provide
sustainable livelihood opportunities for the next generation; and which contributes net benefits to
other livelihoods at the local and global levels and in the short and long term (Vishwambhar and
Lalrinpuia, 2017).so this is how individual make a living with the all assets, activities the carry
out and the available resource .According to (Msuya,R.I,2020) The study was conducted with the
aim to contribute the on going empirical discussion six SACCOS were purposely selected in
mwanza and tabora rural areas where the sample was selected randomly and tit found that after
the comparison there observed the great difference in the two groups there is differences in
poverty levels after SACCOS interventions then later concluded that SACCOS services helps in
the poverty reduction among the members .so for such matter there is experienced sustainable
livelihood

2.2 Theoretical Literature Review

2.2.1 Agency theory
Agency theory is a principle that is used to explain and resolve issues in the relationship between
business principals and their agents. Most commonly, that relationship is the one between
shareholders (members / Board), as principals, and Co-operative executive (management), as
agents. This theory places emphasis on transaction costs and contractual analysis.

According to Abdullah and Valentine (2009), agency theory explains the relationship between
the principals, such as members and agents. In this theory, members who are the owners or
principals of the SACCO, hires by electing the management board as their agent. Principals
(members) delegate the running of business to the management board which in turn hire and
delegate authority to the managers, Clarke.

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First, the theory conceptually reduces the corporation to two participants of managers and the
owners. Secondly agency theory suggests that employees or managers in SACCOs can be self-
interested. Shareholders expect the agents to act and make decisions in the principal’s interest on
the contrary, the agent may not necessarily make decisions in the best interests of the principals,
Padilla (2002). In agency theory, the agent may succumb to self-interest, opportunistic behavior
and falling short of the agreement between the interest of the principal and the agent’s pursuits.
Although with such setbacks, agency theory was introduced basically as a separation of
ownership and control, Bhimani (2008). Indeed, agency theory can be employed to explore the
relationship between the ownership and management structure.

Figure 1.Conceptual Framework

Entrepreneurship training to  Access in education and

SACCOS members medical services
 Self-employment
 Increase income per
household
 Improvement of
Provisions of affordable nutritional status
loans  Improve wellbeing of
poor households
 Increase in purchasing
power
 Contributes to Micro and
Profit share on SACCOS Macro-economic
members development

Source: Researcher conceptualization Emmanuel Zacharia ( 2019)

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 CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Description of the Study Area
The study will be conducted in Tanzania Mainland, specifically at Mvomero district in Morogoro
.it is bordered to the North by the Tanga Region, to the Northeast by the Pwani Region, To the
east and southeast by Morogoro Urban District and to the west by Kilosa District, According to
the (2002) Tanzania National Census and 312,109 in (2012) census, The population of the
Mvomero District was 260,525.Mvomero district .geographically Mvomero district lies on three
ecological zones such us high land and Mountains ,Miombo woodland zone and Savannah River
basin line .on socio economic activities include livestock keeping ,Agro processing ,Tourism and
related activities ,Agriculture and Financial services

3.2 Research Design

The study will be conducted through a descriptive research design the aim is to understand,
describe and explain well impact of employees or members based on SACCOS on income
warfare of its members. Descriptive research design will be used since its applicable much in the
real situation without the interference of the researcher for such reason now it will provide with
chance to identify and describe the characteristics of population on study as well as their
relationships been chosen because it allows the use of both qualitative and quantitate This sample
will be drawn from Mvomero SACCOS teachers Ltd where the members is the micro credit
society and managers in Mvomero SACCOS cooperatives also will be among the sample in data
where now the sampling process will be conducted to select the study population from the
SACCOS teachers Ltd including employers such us managers, cooperative registrar ,loan
officers and all other SACCOS members.

3.3. Population Study

The study population will include all members of SACCOS teachers Ltd ,In Morogoro
Mvomero District (Teachers SACCOS, farmers SACCOS and public employees
SACCOS) .where from these the information will be drawn from them through providing them
with the questionnaire also through focus group discussion and interviews

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3.4 Sampling techniques and sample size
3.4.1 Sampling technique
A simple random sampling will be used for the selection of the sample for Co-operative
members whereby all members had an equal chance to participate in the study. The research is
done purposely chose members of the Board, Members representatives and staff members for the
study. The great aim of using random selection is to ensure varieties of people will be involved
in the sample so the varieties of individuals with different views, opinion and ideas will get equal
chance of being involved in the sample

3.4.2 Sample size

The target population will be registered and active members of Mvomero Teachers SACCOS
Limited in the Morogoro region, rural District. , where the sample of 30 people will be selected
where now 15 will be selected from stuff members and other 15 will be the SACCOS members
that will be enough to provide information to facilitate data reliability

3.5 Data and Data Collection Methods

3.5.1 Types of data
In order to achieve research objectives to a sound level, both the primary and secondary data will
be useful so that the consistence of data to be ensured. The aim also is to obtain more and more
information about how the Mvomero SACCOS teachers Ltd facilitate its members livelihood
sustainability for such matter all primary and secondary data will be useful in data collection
process .

3.5.2 Sources of data

3.5.3 Data collection techniques
3.5.4Primary data
The primary data will be collected through interviews, , direct observation and questionnaire
method that will provide the chance to distribute to the SACCOS members ,loan officers and the
general SACCOS board members including administrators and managers .

3.5.4.1 Questionnaires
List of questions such as open-ended and close-ended will be distributed to the respondents to
fill the answers corresponding to the questions that will be prepared these questions are

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structured in a such a way the important data concerning what is needed to achieved .The
questionnaire are also framed in the way that facilitate the easy understanding to help the
respondents to understand directly without ambiquous. this will help the researcher to obtain
directly the information that is clear to the problem identified

3.5.4.2 Interviews
Semi-structured interview will be used to collect data from Board Members, Members
Representative and staff members. Both Board Members, Supervisory Committee Members, and
staff members are also considered to provide valuable information about the Co-operative. Semi-
structured interviews will be used as it will allow respondents to use their own words in
answering questions. Open ended questions will be used and then information will be recorded
from respondents in the space provided in form.

3.5.5 Secondary data

This is data will be collected from a source that has already been published in any form. This
data will be drawn from different documented materials such as journals, reports, website
referencing, newspapers internet and other relevance sources this is assurance of data that will
be collected from the field using focus group discussion, interviews and direct observation the
aim of using this sources is also to come up will reliable information

3.6 Data Analysis

Data will be analyzed using descriptive statistics known as: percentages, bar graphs and charts
which show information collected from the field so the analysis of the data will be organized and
presented, where the researcher will summarizes the responses from thr respondent from
questionnaire and put them in are sensible manner and presentable manner the aim of analyzing
is to summarizes, I identifying the needs that is to say interpreting and prepare the report

3.7 Data presentation

After data collection and analysis data will be presented in the form of graphs, charts and pie
charts this aim to simplify the process of clarify and easy interpretation of data or information
and easy observation of how the required result have been realized

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3.7 Schedule of Activities:
The schedule of activities is described in figure below
S/N ACTIVITIES NOV DEC JAN FEB MAR APL MAY JUNE JULY
1. Preparation of concept
notes, research proposal
and questionnaires
2. Research proposal
submission
3. Collection of data
4. Data analysis
5. Final report writing
6. Submission of the final
report

3.8 Research budget

The study is expected to cost an amount of 180,000 TSH. A detailed breakdown of fund is illustrated
below
5.2 proposed budget
ACTIVITIES COST(TSH)
1 Travel cost 60,000
2 Data collection 45,000
3 Computer time for data entry and analysis 30,000
4 Stationery 15,000
5 Typing 25,000
6 Binding 5,000
TOTAL 180,000

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