The role of savings and credit cooperatives in promoting access to credit in Swaziland

Internationally acclaimed institutions within the development field, such as the United Nations (UN) and the International Labour Organization (ILO), have taken a keen interest in the cooperative model as a mechanism that can be utilised to promote financial inclusion. However, in Swaziland, there have been mixed views regarding the role of savings and credit cooperatives (SACCOs) in facilitating access to financial services for their members. Moreover, within applied economics literature, research has been scarce on the role of savings and credit cooperatives in facilitating access to credit. Additionally, there has been limited knowledge concerning the role of savings and credit cooperatives in promoting access to credit in developing economies like Swaziland. The main objective of this study was to assess the role of savings and credit cooperatives in promoting access to financial services, especially credit services to their members. Empirical analysis was based on both the qualitative and quantitative approaches that utilised a combination of primary and secondary data. The data was collected in a survey of 38 savings and credit cooperatives in Swaziland through face-to-face interviews with respondents and from the cooperative data analysis system (CODAS). The data analysis tool utilised for this analysis was the Statistical Package for Social Science (SPSS) version 22. The results of the study indicated that savings and credit cooperatives in Swaziland have a high level of outreach with an average membership of 631 members, with 46 percent representing women, and also have one physical access point. In addition, in 2014 they managed to accumulate total assets worth E17 333 051, mobilised savings worth E13 501 341, and issued loans worth E11 154 433. However, these savings and credit cooperatives also experienced a huge amount of outstanding loans, accumulating to E12 542 230 in 2014, and a significantly low level of penetration of 3.09 percent. The results of the study also showed that savings and credit cooperatives in Swaziland failed to meet international standards of financial sustainability set for cooperatives. The social performance indicators revealed that savings and credit cooperatives utilise occupation as the common bond. Their development goal is to improve financial access and eradicate poverty for their members, although the savings and credit cooperatives are modest in that they are established to target low-income and middle-income earners. The results also showed that the savings and credit cooperatives vary in terms of human resource policies and staff incentives. In addition, SACCOs were reluctant to invest in enterprise financing ventures and they also experienced low client retention. It also transpired from the results that the major challenges faced by financial cooperatives in Swaziland included low levels of skills and competition from commercial banks. Another major challenge that emerged from the results was the introduction of the Financial Service Regulatory Authority (FSRA), which has escalated the workload of savings and credit cooperative managers/clerks in preparing quarterly reports to be submitted. This has also brought about confusion within the savings and credit cooperative movement as they now report to two separate entities, the FSRA and the Commissioner of Cooperatives. Retirements and retrenchments comprised another major challenge cited by the respondents, as some of the SACCOs have lost their faithful members due to the ending of employment tenures, which has also influenced their client retention rate