According to World Bank there are around 1.7 billion unbanked adult in the world due to lack of awareness, access, convenience, steady income and trust. Saving and Credit Cooperatives Societies its a self-help and democratic cooperatives in which a group of people stock their savings and offer loans to their own member, main objective SACCOS was to combat poverty by supporting the poor how to utilize limited sources . Credit union first exist in Germany 1846 and continued gain popularity in Canada, US, Europe and mainly developing countries like Africa. Membership of SACCOS is open to whoever belongs to a group regardless of religion, race, gender, color or job status and run by professional management team, in Tanzania example Ushirika, TCDC.
SACCOS is one such alternative do wonders when it comes to boosting financial inclusion in urban and rural areas of developing nations. According to 2014Global Census on Cooperatives there are around 2.6 million SACCOS in 145 countries which have 1 billion members and clients, saving and credit cooperatives societies support SME; cooperative sector plays significant role in Tanzania financial sector, SACCOS is now predominant form of external financing for small and micro enterprises.
SACCOS have emerged as an effective way of reaching to the unbanked but it faces different challenges; here are some challenges and solution:
Reporting and data management challenge; every SACCOS depends on several reports for their operation it may include loans report, accounting report, members/client report,financial position report, it becomes a challenge if they cant access the reports at their convenience since the data are not well summarized and captured. Amala System have a better data management, real time and reporting capabilities, its in favor of SACCOS since automated reporting will be beneficial in compliance and quick decision making process also it has the capability to understand your members and product better such as reports will help you understand the product that do well and what members really need and which product to capitalize.
Delayed service delivery to members: Members complain of slow service such as delay loan payment, delayed loan approval due to unreliable technologies and internal bureaucracy for example a member might apply for a quick loan and receive it after some few days and can cause member inconvenience and irrelevant, therefore a reliable core banking solution such as Amala Core Banking Solution will quicken operation as its mobile apps can be accessed anywhere at anytime by authorized users Amala Popote will enable loan/field officers to make approval at anytime from anywhere and Amala Yangu enable members to apply loan and review their account without physical visit in the office.
Manual process and outdated technologies: SACCOS have known the importance of incorporating technologies in their daily operations and the current Microfinance act and regulation requires to have management of information system like Amala Core Banking unfortunately some SACCOS are still operating manually and some use outdated system which can’t meet their demand, therefore board of SACCOS and their leaders should avoid working with unreliable system and should make a quick decision on having automated and reliable system.
Ever changing SACCOS regulations; SACCOS have been encountering with an escalation of complex regulatory and compliance which become obstacle to many, so SACCOS should invest in technology that can automate compliance task such as core banking system that will comply with Bank of Tanzania acts and regulation like Amala Core Banking.
Bad debt and loan defaults; due to economic situations some members/clients never fully recover their loan repayment and this might cause loan default and bad debtors which may affect members relationship, decrease cash flow and higher interest rates, to achieve this SACCOS management needs a reliable system that can restructure loans, and manage data of the members’ account history for loan appraisal
Amala Core Banking System have had a tremendous growth impact towards its clients and improved customer experience through its amazing Amala team. The sustainability of financial institution such as SACCOS, Microcredit and Microfinance lies with a better system like Amala, contact us today so that we can support you on improving your services to your members/clients.