By The Citizen Reporter

Last Friday (January 7, 2022), we published in these pages a somewhat puzzling report on microfinance in Tanzania.

Entitled “Number of Saccos Declines in Latest BoT Record,” the report noted that many microfinance companies in the country operating in the manner and style of Cooperative Savings and Credit Societies (Saccos) do miserably failed to fully meet the requirements. by the Bank of Tanzania (BoT).

To begin with, a cooperative savings and loan society is fundamentally “a member-based, member-driven financial institution that operates on cooperative values, identity and principles that include social responsibility, openness, l ‘honesty and caring for each other’. .

Simply put, a Saccos is a self-help organization in which a group of people save together and give each other loans at moderate interest rates as members.

The main objective of the creation of a Saccos is to fight effectively against poverty by allowing the poorest members – relatively speaking – to learn how to make the best use of their limited resources.

The Saccos system is a global phenomenon that was conceptualized as an alternative to commercial banking. Much of this was noble efforts to strengthen and stimulate financial inclusion, especially in developing countries around the world.


According to the World Bank, an estimated 1.7 billion adults were unbanked globally in 2020 – mainly due to the singular lack of banking awareness / education, easy access to banks and / or a stable income that was worth bothering conventional banks. Over time and events – and gradually – brilliant minds have proposed the Saccos concept as a simple alternative to traditional banks.

In this regard, the Saccos system offers more or less similar financial services – but less lucrative financial products – to its clients who are strictly members of the group. But, it should be noted that the Saccoses are non-profit organizations; nor are they charities, by the way.

The legal basis

In Tanzania, Saccos are incorporated, registered, regulated and supervised under the Cooperative Societies Act, as amended from time to time.

But, they must also be registered and otherwise controlled by the Bank of Tanzania (BoT) as microfinance institutions. This is in accordance with the provisions of the Microfinance Law of 2018, as amended from time to time.

It is in this regard that unrest began to occur in the Saccos sub-sector of the country’s financial sector of the economy at large.

According to the Central Bank Area Consolidated Economic Performance Report for the quarter ended September 30, 2021, the number of Saccos organizations registered in Tanzania increased from 3,129 in 2020 to 2,541 in September 2021.

In addition, the number of individual Saccos members increased from 596,974 in 2020 to 520,819 the following year, while the value of outstanding Saccos loans increased from 422.7 billion shillings to 436.4 billion shillings. during the same period.

There are indeed other failures in Saccos operations across the country, some of which cannot be qualified as Saccos institutions under the 2019 Microfinance Regulation (Cooperative Savings and Credit Societies ) and other criteria.

We therefore urge the government and its institutions concerned, including the central bank, to review the configuration of Saccos and to propose a more efficient and sustainable one. Tanzanians must also make effective use of the arrangement to improve their income.

About Wanda Reilly

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