Effects of credit provisions and collection criteria of Savings and Credit Cooperative Union in Tanzania: a case study of self employed women in Arusha (Sewia)

Abstract

This research entitled 'the credit provision and collection criteria in Sewia Saving and Credit Cooperatives Union for women in Tanzania' examined the loan provision, collection procedures as well as the default rate of this SACCO. Today a number of SACCOs are established to give a saving and loan services to clients and much emphasis is given for those women who wants to run small and medium n business enterprises. Sewia' s major clients are women who would have an impact on changing their own life as well as their families. The study attempted to identify and assess the loan provision criteria's, collection procedures, the reason for default, the impact of interest on the cooperatives and clients and last but not least the benefits and challenges of the SACCO under Sewia. Data for the study was collected through questionnaire, interview and discussions with four cooperatives members and credit officers who are situated in the Sub-City of Arusha. Results of the study indicate that in order to give loan to a woman Sewia have set criteria so as to decrease the default rate. A woman has to save money and has to provide a business plan in order to be given the requested loan, after being a member of SACCOs. The study also indicates that the interest charged has a great impact on clients which make them to reduce the amount of loan they want to take. The study has recommended that, a woman will be eligible to loan if she has enough saving which is compatible to the respective loan size. It is also recommended that, there should be a grace period adopted by the Savings and Credit Cooperatives (SACCOs) because a business is not expected to generate income immediately after being established. It is recommended that, the interest rate established by the cooperatives should consider also the borrowers since they are the major clients of the cooperative.