Challenges and Prospects of Rural Saving and Credit Cooperatives in Sekota Woreda, Amhara-Ethiopia

Abstract

Saving and Credit Cooperatives (SACCOs) are the main financial solution of the people who have low income level. But they have their own challenges that retard their financial solution to their members and the economical contribution to a country. The study was aimed to identify the challenges and prospects of RUSACCOs, in identifying the determinants of volume of credit taken by RUSACCOs members. Primary data was collected from 9 saving and credit cooperatives and a total of 134 sample farmers. Descriptive statistics and econometrics analysis methods were used. Sex being female, age, cooperatives extension services, years of membership and farm income were found to influence the volume of credit positively whereas households distance to cooperatives was found to influence volume of credit negatively. Lack of knowledge and capacity of management committees and poor members’ participation, lack of appropriate support from cooperative promoters, member’s perception on borrowing is as risky and high interest rate and limited awareness of about cooperatives rules, principles and benefits by the members are the main challenges facing members. Cooperatives also faced by lack of professional leaders and members failed to pay back loans on time. Even though the cooperatives had such challenges, there are prospects that bring benefit to cooperatives like presence of active participant in cooperatives and supports from Government.