Saccos growth steady, but rural access still elusive

Dar es Salaam. Rural communities remain largely underserved by savings and credit cooperative societies (Saccos), which are mostly operating in urban areas, according to the Tanzania Cooperative Development Commission (TCDC).

The TCDCs annual performance report for 2023 shows that the number of registered Saccos in Tanzania stood at 884 by the end of the year.

Membership rose from 1.80 million in 2022 to 1.82 million in 2023, representing an increase of 0.52 percent.

The majority of Saccos are concentrated in urban centres where salaried workers dominate membership.

Dar es Salaam, Arusha and Mbeya lead in the number of registered Saccos at 293, 133 and 93, respectively.

In contrast, Simiyu and Katavi lag far behind, with just three and five registered Saccos, respectively. This disparity underscores the persistent financial access gap between urban and rural populations.

According to the registrar of cooperative societies, Dr Benson Ndiege, despite the regional imbalance, Saccos’ performance has generally improved after total assets rose by eight percent from Sh1.225 trillion in 2022 to Sh1.328 trillion in 2023.

“The outlook in Tanzania seems to be very promising and unquestionable due to existing growth and outreach,” he said

Dr Ndiege added that the growth in savings and deposits, which rose by Sh95.64 billion to reach Sh966.94 billion, enabled Saccos to issue more loans to members.

Total outstanding loans increased by six percent to Sh1.113 trillion at the end of 2023. Additionally, the sector contributed to government revenues, with taxes and deductions paid by Saccos increasing by 23 percent to Sh12.52 billion in 2023.

While Saccos have shown growth, economists argue that their urban-centric model is not sustainable if Tanzania hopes to achieve broad-based financial inclusion.

Mzumbe University economist Daudi Ndaki emphasised the need to address the unique financial realities of rural communities.

“Urban dwellers can easily save due to regular incomes, but rural residents rely on seasonal income, and many prefer informal savings methods. To extend financial inclusion, we must design products that fit rural economic patterns,” he said.

Dr Ndaki also stressed that over-reliance on informal savings in rural areas limits the ability to accumulate wealth and access credit.

“Promoting rural participation in Saccos is essential to offering financial security and growth opportunities,” he added.

University of Dar es Salaam economist Humphrey Moshi called for greater government involvement to fill the gap left by private-sector-led financial institutions.

“The private sector tends to focus on profitable areas with low risks, leaving rural communities underserved,” he said.

Prof Moshi suggested that Tanzania could learn from Southeast Asian countries, where government intervention has been crucial in expanding financial services to rural areas.

“Certain essential services can only be delivered through deliberate government action. Establishing specialized financial institutions targeting rural communities is a step in the right direction.”

Economists and policymakers agree that more needs to be done to extend their reach to rural areas.

Tailored financial products, strategic government intervention, and targeted campaigns to attract youth and women are essential steps toward building a more inclusive financial ecosystem.

The TCDC report also reveals that youth and women remain underrepresented in Saccos. Members aged below 35 years accounted for 36 percent of total membership, while women made up 37.62 percent.

The report recommends intensified awareness campaigns to attract more youth and women to join Saccos and participate in their governance.

According to Dr Ndiege, the subsector is expected to grow more than the current status due to the digitisation of Saccos services, opening of branches and outlets, existing trainings and workshop attendance (domestic and international forum), close supervision, investment done by the Saccos, engagement of different stakeholders in the sub-sector, on-going licensing processes, innovation and creativity applied.