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The Role of Savings and Credit Cooperatives (SACCOs) on Financial Inclusion in Zimbabwe

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  • Michael Takudzwa Pasara

    (North-West University, South Africa)

  • Albert Makochekanwa

    (University of Zimbabwe, Zimbabwe)

  • Steven Henry Dunga

    (North-West University, South Africa)

Abstract

This paper investigated the role of Savings and Credit Cooperatives (SACCOs) in Zimbabwe using a national baseline survey. Several economic challenges over the past two decades left ordinary citizens unbanked and financially excluded. SACCOs are viewed as a viable option towards financial inclusion. Classical and modern theoretical literature as well as experiences from other African countries were discussed. Data was collected using a triangulation method of questionnaires, interviews and focus group discussions (FGDs) across 147 SACCOs. It was observed that there are around 6,028 cooperatives with only 4.8% (289) being SACCOs and majority of members cannot distinguish between cooperatives and SACCOs. More than 90% cited that economic and political conditions eroded their savings value thereby reducing confidence in thrift models. 77 SACCOs (52.8%) do not own assets, and only 6.2% have over 1,000 members. Discrepancies emanate from inconsistent subscriptions, unfavorable and outdated government by-laws. SACCOs are classified as high-risk borrowers due to inconsistent subscriptions and poorly audited financial statements resulting in high interest rates and adverse selection. The study recommends additional training to increase administrative capacity and the scope of SACCOs, increased coordination of operations to reduce systematic risk through consistent by-laws and economic policies that stimulate stability and restore confidence in the financial sector.

Suggested Citation

  • Michael Takudzwa Pasara & Albert Makochekanwa & Steven Henry Dunga, 2021. "The Role of Savings and Credit Cooperatives (SACCOs) on Financial Inclusion in Zimbabwe," Eurasian Journal of Business and Management, Eurasian Publications, vol. 9(1), pages 47-60.
    • Handle: RePEc:ejn:ejbmjr:v:9:y:2021:i:1:p:47-60
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    2. Dereck Moyo (Mr) & Tough Chinoda (PhD) & Unice Goshomi (PhD), 2023. "Impact of Savings and Credit Cooperative Society Groups on Food Security in Zimbabwe: A Case Study of Marange Community in Mutare District," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 10(06), pages 127-134, June.
    3. Dereck Moyo (Mr) & Tough Chinoda (PhD), 2022. "Impact of Village Savings and Loan Associations on Food Security in Zimbabwe: A Case Study of Marange Community in Mutare District," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(12), pages 110-124, December.

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