1. Definition of SACCOS
Definition, aims and Mission of SACCOS;-
Savings and Credit Cooperative Society (SACCOS) is defined as private and cooperative financial intermediary where membership is open and voluntary. It belongs to its members who manage it democratically. It is thus the crucible of the members’ economic and cooperative education.
Savings and Credit Cooperative Societies (SACCOS) is a financial organization owned and operated on not for profit basis by its members according to cooperative principles. The main objectives being promotion of development of habit of putting some money aside as savings among its members and creation of a source of credit for its members at controlled rate of interest exclusively for provident or productive purposes.
The SACCOS aims at meeting the financial needs of all its members men/women, old/young, rich/poor in particular, by encouraging savings and granting loans to the members.
In order to provide the best and most durable satisfaction to its members, the SACCOS is concerned about its own financial stability and to do so it must achieve profitable management on an on going basis.
The mission of the SACCOS is to make available on site, to any one wishing to join it, financial services under the best conditions, while enabling the cooperative to cover its operating expenses and providing for the economic education for its members.
The Savings and Credit Cooperative movement in Tanzania started in 1961, when the Government drafted money by law to enable any group with a common bond of occupation, association and residence adopt the by law and register. It was a protection move against the urban areas rampant with shameful activities of Pawn Brokers and Money lenders who were charging exorbitant and illegal rates of interest and, or instituting a mechanism for attitude change of unwise spending of Rural Peasants who were earning sizeable sums of money during harvest time, but go back to poverty.
Main functions include Promotion of Savings and credit opportunities to the members, Promotion of financial stability among members, Enhancement of the habit of saving regularly, borrowing wisely and paying promptly. Another function is to links SACCOS members with other SACCOS movement such as active member of SCULT. Never the less, it looks for the best credit facilities opportunities available and extends to the members at reasonable and agreeable interest.
2. Policy review
Cooperative development in Tanzania can be traced during 20th century. Unfair marketing and processing practices and political discrimination were among the factors caused the establishment of cooperatives association mainly in cash cropping areas. After independence in 1961 the government policy was to make the cooperative movement an engine for economic development. Therefore government promoted the existing cooperatives and became important tool for the economic development of the rural sector (Report, 2001).
The policy of Socialism and self reliance for the period of 1967-1976, transformed the cooperative to the rural development process based on Ujamaa villages. Thus, individuals or groups allowed forming multipurpose cooperative societies. Activities for the multipurpose cooperative ranging from Marketing Agricultural produce, procurement and distribution of inputs and whole sale and retail trade and transportation (Report, 1991).
This was followed by the open market policy in 1986, made the Government with support from World Bank and International Monetary fund to undertake the structural and economic adjustment program. This policy had a negative impact in cooperatives such as abolition of price control, elimination of subsidies, liberalization of marketing of agricultural inputs and outputs (Report, 1991).
New policy of cooperative development (2002) was the second cooperative policy after that of 1997. The main policy objective includes the availability of sustainable development of members and using cooperative as a tool for achievements. The impact of this policy has been revealed in different aspect including the establishment of cooperatives in other sectors of the economy and make the total number of 5789 cooperatives country wide (SACCOS, 2004).
The Cooperative Poverty Reduction policy is performing in line with vision National Strategy for Growth and Reduction of Poverty (NSGRP) commonly known as (MKUKUTA). Cooperatives have been penetrating in rural areas and are involved with agricultural crops and credit and saving activities (Report, 2005).
3. Empirical Review
The importance of community organizing in Tanzania revealed longtime before independence. It was in 1925 when the first coffee cooperative known as the Kilimanjaro Native Planters Association (KNPA) established. Registration of KNPA was done in 1932 when the cooperative ordinance cap (Cap 211) enacted and KNPA split into two and formed one secondary society known as Kilimanjaro Native Cooperative Union (KNCU).
2. The importance of SACCOS
The importance of the SACCOSs in poverty alleviation and the general economic growth of Tanzania should not be under estimated; down here are the special features of the SACCOSs which make them important and special financial institutions on which the government of Tanzania should pay attention, these features are;-
2.1 Accessibility; - most of these microfinance institutions are established even in rural areas where banks can not be established bringing financial services closer to the people who could otherwise not be accessible to these services, this increases entrepreneurial morale to Small and Medium Enterprise (SME) operators in Tanzania.
2.2 The SACCOS are more flexible and not complicated as they are established by the people themselves, therefore the people themselves can establish by laws which are more flexible accommodating even the people who are extremely poor and economically marginalized, also no business plan or any detailed description of their business is required for the members to access loans.
2.3 The use of collateral substitutes; So long as these people are poor, therefore the majority does not have the formal collaterals required by the banks, in stead of this collateral substitutes like group guarantee, deposited savings and un surveyed houses are accepted as collateral substitutes for members to access loans.
2.4 The SACCOS also as Microfinance institutions encourage savings to their members, the culture which was not present in the past, these savings can be used for investment and also they receive dividends each year which is also an added income to the members.
2.5 The pricing of their loans is not very high as it is determined by the member themselves and therefore it is fairly done considering the sustainability of their cooperative.
2.6 SACCOS are targeted to serve the poor, this is done through organizing groups, train them on the necessary requirements for them to access the loans and the way the loans are to be spent, this ensures a good repayment rate and in turn these microfinance institutions becomes more strong to serve the poor as they don’t loose capital out of defaults.
2.7 The screening of good clients is done by the members themselves as they become responsible in case of default; this reduces the screening cost which is avoided by the formal banks and also reduces the risk of loosing money through defaults.
2.8 SACCOS help individuals and house holds to meet their basic needs and protect against risk. When the house holds and individuals have basic needs and protected against risks, the possibility of establishing small business is great
2.9 Improvement of economic welfare of the community and enterprise stability or growth of low income households is the role of the SACCOS as microfinance institutions in Tanzania. If the community is well off and enterprises are stable the development of the latter is unquestionable.
2.10 The SACCOS as Microfinance institutions have the role of economically empowering all kinds of people, thus promoting gender equality and improve household wellbeing.
2.11 The availability of small loans through the SACCOS within the community brings about the possibility of establishment of small businesses some of which can develop and result to big business establishments.
2.12 The SACCOS also have been a source of employment to the people who work as employees of the SACCOS; hence they are part of the employers list.
Moreover, the government has shown the political commitments and willingness (affirmative action) to support 2002 cooperative policy by strengthening the Cooperative support institutions such as the Moshi University College Cooperative and Business Studies, (MUCCoBS), Cooperative Auditing And Supervision Corporation (COASCO), Tanzania Federation of Cooperation (TFC), Savings and Credit Cooperative Union League of Tanzania (SCCULT). The existence of these Institutions contributes to empower Cooperative membership through acquisition of education, new knowledge and skills, strong saving and credit cooperatives societies and cooperative banks that provide good financial services to members, just to mention few.
SACCOS promotes community ownership and peoples’ voice is the driving force in relation to the cooperative principles. Members have equal right to participate in development of their society.
3.1 Empowerment of SACCOS Members
In Tanzania the concept member empowerment in Cooperatives was introduces in the late of 1980’s and early 1990’s with an objective to facilitate participation and involvement in decision making pertaining to their own social and economic development using cooperative organization as a tool with the ultimate goal of creating wealth and reducing poverty.
It is revealed that, with members’ empowerment, knowledge skills and experience is shared in the process of problem identification, planning, implementation, monitoring and evaluation of the cooperative activities in a participatory manner.
3.2 Sustainability of SACCOS
SACCOS as a grass root based financial aimed to be an effective financial intermediaries. In Tanzanian context it has been established through some studies that, the SACCOS potentiality of SACCOS as a financial intermediaries has not been optimized due to lack of innovation of production, law capital formation (depending much in equity financing which is not a permanent capital) and financing methodologies. This has been among the factors that contribute to hinder members / customers needs and expectation as a result of unsustainable SACCOS.
Other factors that contribute to poor sustainability of SACCOS include weak internal control system; inadequate Human resources, unsustainable interest rates, inadequate knowledge on microfinance best practices just to mention few.
Organic farming maintains soil fertility
Organic methods of production can sustain soil fertility and increase crop yields.
Soil
is one of the most important resources on the farm, both in crop and
even in animal production. Unless farmers take good care of the soil,
their crops and even pasture cannot give them the desired yields and
income. The problem is that although every farmer wants to get the
highest yield possible, they forget that good crop yields can only be
obtained if they maintained soil fertility through proper management,
which helps maintain the nutrient balance in the soil.
Inorganic fertilizers cause soil acidity
It is now the beginning of the year. Many farmers will be preparing
their land in time for planting. But the only input most of them will
think about when it comes to soil fertility is the use of chemical
fertilizer. But what they may not know is that the use of such
fertilizer will only help the crop to grow in that particular season;
the use of chemical fertilizer over a long period of time contributes to
the build up of soil acidity– many crops including maize, which is
widely grown in the country cannot do well in acidic soils, a reason why
many farmers record low crop yields despite using increased amounts of
fertilizers.
- Clotolaria
Desmodium
Feed the soil, not the plant
Organic farmers use the maxim: Feed
the soil to feed the plant; the meaning of this statement is simple:
When farmers build the soil fertility over a period of time, say 3
years, using organic matter such as recycling of crop residue, compost,
liquid manures, crops rotation etc., all the major soil nutrients that
are taken up by plants or lost through soil erosion are replaced
naturally thus maintaining soil fertility. Organic farming lays the
foundation of soil fertility in all types of soil. The importance of
organic soil fertilization is illustrated by the use of the simple
diagram given in the first column.
Lablab
From this diagram it is clear that
organic matter is an important part of the soil (crop residue such maize
stalks, bean residue, grasses etc.) that includes living
microorganisms, control both the chemical composition and the physical
structure of the soil. The more organic matter is used in farms, the
better the soil becomes. Farmers who add organic matter to the soil
every year will notice a gradual increase in crop yields because the
organic matter helps increase the nutrient level in the soil, and
therefore fertility.
If chemical fertilizers are used year
after year, the nutrients balance in the soil is interfered with,
leading to a situation where you have more of one nutrient that blocks
the others from being taken up by plants; for example, too much
magnesium in the soil can block the uptake of potassium while the
presence of more potassium can block the release of magnesium for use by
plants –in the same way that excess nitrogen can block the availability
of potassium copper to plants.
Since farmers cannot be able to tell what nutrients are missing in their soils unless they do soil tests, the easiest way is to ensure their soils have adequate organic matter at all times. Another option is to avoid the overuse of chemical fertilizers. These practices help to regulate the nutrient balance in the soil when combined with other sustainable agriculture practices such as addition of compost, manure, planting fertilizer trees, crop rotation, inter-cropping maize with beans and other legumes, planting cover crops and ensuring permanent soil cover to prevent soil erosion. The table below helps farmers decide which material to use to increase soil fertility.