In most cases many SACCOs in Tanzania, regardless of the good objective they have, they fail to deliver adequate socio-economic benefits to members as a result that members expected when established the SACCOs are not achieved. This is caused by various internal and external factors affecting the area of microfinance operations or performances. As time goes these factors/challenges may cause many SACCOs to become dormant or may even collapse totally and for some other may keep on operations but fail to deliver services effectively to its members and the community at large. They cause SACCOs to provide service to its members and lead to poor member’s participation as far as commitment is concerned, loss of members’ funds, failure to overcome competition, endless of internal conflicts and even the loss of SACCOS autonomy and independence just a few to mention. These problems in precise are;
1. Poor Accounting System and Record Keeping
ICA (2005) shows that among the biggest and main challenges in SACCOs and Microfinance Institutions is about the tendency of management staff ignoring some of basic accounting systems’ requirements such as keeping up-to-date records, data and timely, correct and complete records. There is always a temptation for leaders to ignore lending and accounting policies and procedures such as issuing loans without recording lenders’ details to proper systems, moreover; the indications are the failure to maintain quality of accounting records and data lead to delinquency risk, credit risk and payment default risk.
The Microfinance Act, No. 10 (Regulation) 2018 requires these Microfinance Institutions to have and use proper adequate and efficient systems Amala App Suite that could secure these MFI’s from constant risks that happen every now and then. The presence of these systems will ensure the security of the Microfinance funds and effective management of funds by co-operatives including the Saccos. The management of funds by co-operatives involves managing assets such as cash, accounts receivable, inventories, fixed assets and investments in other organizations, it includes managing liabilities such as accounts payable and obtaining favourable long-term financing.
2. Non adherence to Co-operative principles
The co-operatives have unique characteristics and regulations that are adhered to including cooperatives principles. People must see the possibility of forming co-operatives to feel the need to be convinced that through such an organization in this matter, SACCOs and other Microfinance Institutions, their need will be fulfilled. The SACCOs are in most cases violating the co-operative principles and values in their operations.
In this case, the SACCOs and Microfinance Institutions need to be assisted with linking to the system that will not only ensure the operations of these SACCOs and Microfinance Institutions are making surplus profits and benefits but also comply necessarily to co-operative principles as set by the enabling and regulatory laws of the land. Amala App Suite gives a Saccos and Microfinance Institution access and ground to comply with the principles and regulations at every stage of its operations. This lead to the Saccos not only make a profit but also run its business legally and assures the security of its existence as to its members.
3. Competition from other Microfinance Institutions and Banks
Auka and Mwangi (2013) argue that competition between SACCOs and other financial Institutions is a characteristic of a globalized economy in which the business environment is very dynamic and firm have adapted to such changes. SACCOs have to compete and attract members so as to have more customers to use its services. However, SACCOs accord members an opportunity for saving regularly, accumulating the saving and thereby creating a pool from which they can borrow exclusively for productive purposes at fair and reasonable rates of interest that would be obtained from other financial institutions and Banks. Nowadays due to various financial institutions including Banks are offering microfinance credit to customers within a short period of time and have very simple requirements.
Now for a SACCOs to survive in this pool of competitors who seemingly appear to be strong and fierce, the effective, adequate, simple affordable and qualified system that can handle the competition by guaranteeing security and effective functioning of such SACCOs is inevitable and Amala App Suite is the one and best system that can suite to help the SACCOs and Microfinance Institutions in this competition and ensure the growth of the SACCOs to a level is expected to be.
4. Weak assistance from national/local institutions supporting SACCOS
The success of cooperatives also depends on the role of supporting institutions at national or local levels. In order to supervise and manage the SACCOs in Tanzania, the savings and Credit Co-operative Union League of Tanzania (SCCULT) was formed linking the Saccos across the country. Apart from supervising and managing SACCOS, SCCULT is required to provide professional technical and advisory services to the SACCOS but it has failed due to lack of enough funds and enough skilled and experienced manpower in cooperatives (SACCOs) issues.
As a result, SACCOs are operating helplessly with no enough support. They solve their problems and challenges on their own ways, hence due to inadequate experienced stall and leaders, these SACCOs find themselves in other problems such as debts burdens from external sources poor financial management and loan recovery and assessment system, misuse of funds poor products and service hence failure to compete against each other.
Singo Africa with Amala App Suite gives SACCOs guarantee on professional and adequate assistance on how SACCOs can manage their business towards expected goals. It is an accurate SACCOs/Microfinance service provider that is fit to support SACCOs and lead them to the deliverance of best results. We remove the gap that SACCOs may run unsupported, by offering them the quality services.
Kindly visit us to get your affordable solutions and services that could lead your business to the paramount of hope gross profit and safety to your business operations.
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