Effects of Non-Performing loans on Growth of SACCOS in Tanzania.

Kadaga, Gerald L. (2020) Effects of Non-Performing loans on Growth of SACCOS in Tanzania. Masters thesis, The Open University of Tanzania.

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Abstract

The objective of the study was to investigate the effects of Non- performing loan and other determinants on the growth of SACCOS in Tanzania. The study was done in Mbeya City Council taking population of 66 SACCOS. Data collected form Wards using a questionnaire to respondent from the SACOSS members and data were analyzed by using both descriptive and inferential statistics. The study used regression analysis to establish the effects of non-performing loans on the growth of SACCOS in Mbeya City Council. The study findings illustrated that there is relationship between return on assets (dependent variable) and independent variables (non-performing loan ratio, firm size and leverage). Other finding have shown that lack of sufficient Growth of SACCOS’ wealth has made it difficult for them to absorb their operational losses, which has threatened theirs sustainability. The findings indicated that growth of SACCOS wealth depended on loan management, institutional strengths and innovative of SACCO products. The study then found that SACCOS inadequately complied with their by-laws; incomes from investments did not adequately cover their costs. From findings the study recommends that SACCOS should; opt for equity financing instead of debt financing in improvement on its leverage, continuously review credit policies, and establish irrecoverable loan provision policies, develop staff recruitment policies, use appropriate financing mix. Other recommendation is that the Government should review legal frame work to ensure that institutional capital is used to support growth of SACCOS wealth. Keywords: Economic, Growth, Loan Default, SACCOS.

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