ASSESSMENT OF MOMBO TALANTA SACCOS.

SOUTHERN NEW HAMSHIRE UNIVERSITY.
SCHOOL OF COMMUNITY ECONOMIC DEVELOPMENT.
ICD 512 COOPERATIVE DEVELOPMENT.

ASSIGNMENT THREE- FIELD WORK.
ASSESSMENT OF MOMBO TALANTA SACCOS.

INSTRUCTOR: PROFESSOR A.B.C OFUNGUO.
CENTRE: ARUSHA.
NAME: JOSEPH CLEMENCE.

1.0 Introduction.

This paper discusses Mombo Talanta SACCOS. Its management and operations are assessed and discussed in this paper. Further more its potential in alleviating poverty in Mombo Division is discussed in this paper as well as the shortfalls in its operation and the ways to overcome the short falls are also suggested in this paper. The conclusion summarizes the main points in the discussion.

2.0 Literature review
2.1 What is Cooperative.

Cooperative are organisations formed by the individual persons who pool together their resources to form an organisation to carry out business and through it, they improve their economic conditions of life by so doing, alleviate poverty among themselves. The members who form it are the owners as well as its clients, workers and users of its services and in so doing they share both the costs and the benefits

A cooperative can also be defined as a group of people who work together voluntarily to meet their common economic, social and cultural needs through a jointly owned and democratically enterprises .

Cooperatives are based on the values of self help, self responsibility, democracy, equality and solidarity. Cooperative member believe in honesty, openness, social responsibility and caring for others. The successful cooperatives operate under the following principles, membership is voluntary and open to all, they are democratic, members benefit according to their business with the cooperative, they are independent, they do provide education training and information, and they work together and respect the community

2.2 What is SACCOS?

According to Cooperative Society Act. Act. No 209 of 2003, SACCOS is defined as a registered society whose principal objectives is to encourage thrift among its members and to create a source of credit to its members at a fair and reasonable rate of if interest .
Savings and Credit Cooperatives eg. SACCOS, SACCAS have being in operations for some times and have been of helpful to the members through out the world and especially here in Tanzania but they are weak in terms of management; Education is needed to the members so that their capacity can built through education and training etc

3.0 Background information.
Mombo Talanta SACCOS is found in Mombo township, Mombo Division Korogwe District Tanga region along Moshi – Dar es salaam high way. It is about 40 Kilometers from Korogwe District headquarters where the District cooperative officers are found. It was started in 2004 with 6 members and registered in December 2006. The SACCOS operates in Mombo Division and the members are coming almost from all villages in Mombo Division.

3.1 Management:
The SACCOS is managed by the board with 6 members, it assumes the overall management of the SACCOS. There is also loan committee with three members from the board whose role is to review and approve loan requests. The supervision committee with three people has the role of managing finance and all SACCOS activities as per business plan. The committee also reviews vouchers and SACCOS financial operations in general. The SACCOS general assembly which meets once per year has the role of approving business plan and all decisions by the SACCOS as suggested by the board and sub committees.

Table 1: The Board Members Position and Academic Qualification.

Name Position Academic Qualification Profession Number of years in SACCOS.
Jumanne Mgaya Board Chair STD VII Farmer 3
Nuhu Mipango Assistant Board Chair. STD VII Farmer 4
Elinasafi Kingazi Member STD VII Tailor 1
Sabitina Manento Member Form IV( Certificate community development Community Development officer 1
Nkinda R.Paula Member STD VII Store Keeper 4
Maine Iddi Member STD VII Farmer 3

Source: Mombo Talanta SACCOS office (November 2007).

The board members level of education as shown in the (Table.1) above is very low, most of them are standard seven with only one member whose education level is up to form four. This may expose the SACCOS to the risk of being poorly managed or at loss incase unfaithful manager who can play with forging financial books is employed. The board has to take the initiative to plan for the frequent board seminars to trainings for themselves to acquaint themselves with the management and financial matters for them to be more effective in management.

Table 2: The Supervision Committee Members and Their Position.

Member Position Academic Qualification Profession Number of years in SACCOS
Gervas Haule Chair Person STD VII Farmer 1
Zuber Sayavuli Secretary STD VII Farmer 4
Anna Pascal Member Form IV Mwandishi wa Habari. 1

Source: Mombo Talanta SACCOS office (November 2007).

The level of education of the two members in this committee (Table 2.) is low (STD VII) compared to its function. For them to be able to perform better I think they should also plan to have workshops related to their position to develop better their skills.

3.2 Employees:

The SACCOS has two Employees one Manager/Secretary who is the in charge for all SACCOS office operations, and one Cashier whose keeps financial / loans records. The recently SACCOS general Assembly has authorized the recruitment of the third cashier which is yet to be implemented.

4.0 Objectives.

The Objectives of Mombo Talanta SACCOS are:

 To improve the economic status of its members.
 To build the habit of saving money to its members.
 To provide loans to the members for business, Agricultural inputs and implements, Livestock medicines, Small Industries, and equipments for small scale mining.
 To educate members on cooperative issues.
 To prevent HIV/AIDS transmission and Environmental Conservation.
 To train members on entrepreneurship and business management.
 To cooperate with other financial institutions to increase the SACCOS loan capital.

5.0 Members:
Mombo Talanta SACCOS started with 6 members and since then the number of members has been increased every year. To date there are 243 members from all villages. And any person from Mombo Division can be a member upon his /her willing provided he/she meets the membership requirements.

5.1 Membership requirements.

For some body to be a member he/she has to:

 Pay the entry fee of 10,000/=
 Contribute for five shares each Tsh.10,000/=
 Pass book and ledger card contributions of 2000/=
 Registration fee of 2000/=

Other requirements.

 Must be a resident of Mombo Division.
 Should be 18yrs old and above.
 Must have a sound mind.


Table 3. Membership trends since Inception to date.

Year Number of Members. Percentage increase
2004 56 0
2005 94 59.6%
2006 138 68.1%
2007 243 56.8%

Source: Mombo Talanta SACCOS Office Records (December 2007).

From the table above it is shown that the number of members has been increasing since inception to 2007. The SACCOS members increase has been caused by the sensitization which was being done frequently to the community under the SACCOS operating area by the SACCOS board. It is good to have such initiative however, the SACCOS has to have more competitive products, higher integrity, and others that makes it to be sold to the people without using the current approach which is sensitization in general meetings. This sensitization method may not be productive due to the BAD history of the collapse of former cooperatives which is still in mind of the people.

6.0 Products offered by the SACCOS.

Mombo Talanta SACCOS currently is offering loans for business, Agriculture and Education and emergency loans. Loans for Education are the ones offered to the members for school fees to their children. Emergency loans are the ones offered to the members to serve the emergence needs like attending the sick etc. and has to be paid fully within three months with the higher interest rate than the normal loans offered. The SACCOS also offered fixed deposit services, Saving services and education services.

Table 4. The products offered by the SACCOS from September to November 2007.

Month Business loans Emergency loans Agricultural loans Total
September 160 2 30 192
October 1 - - 1
November 48 - 3 51

Source: Mombo Talanta SACCOS, (December 2007).

From (Table 4) it is shown that business loans are more interested by the customers than other loans. However the low number of loans loans for Agriculture offered in this period is attributed to absence of Vuli rains which caused most farmers who are not around rivers to stop collecting loans for Agricultural purposes.

7.0 The loan Capital.

The loan capital for the SACCOS has been increasing since inception (2004) to date (2007) and the capital shoot up abruptly following the loan borrowed from CRDB bank in November 2007 which amounts to Tshs.94 Millions and also the increase of its members was at faster rate in 2007 compared to other years. The table below shows the trend of loan capital since inception to date.

Table 5. The trend of the loan capital since Inception to date.
Year Loan Capital
[Tshs] Percentage Increase
2004 9,824,980.00 0%
2005 13 749 170.00 40%
2006 29 ,486,246.00 114%
2007 172,537,931.60 485%

Source: Mombo Talanta SACCOS Office Records (December 2007).

8.0 Office Record Keeping:

Mombo Talanta SACCOS has different Tools/Books for keeping records for loan operations and memberships.

8.1 Payment Records.

The payments are well recorded in the office the payments are recorded in:

Payment Voucher- This is the voucher which records every payment paid by the SACCOS.
Bank payment Voucher- record the payments made to bank.
Dispatch Voucher- For recording cheques offered and signatures for the recipients.
Cheque List – Records the Cheques offered by the SACCOS and the Signatories who signed them.
Cheque leaf-This is the leaflets showing the number of Cheques offered by the SACCOS and also keeps the records for number of cheque books used.
Daily Summary Voucher Book- Records all payments made by the SACCOS per day.
Cheque register book- Records the Cheques prepared by the SACCOS.
Loan subsidiary ledger- Records the loans taken by SACCOS members. It shows the date the loan was offered and the date that the loan is supposed to be fully paid.
Pass book- Keeps the records for the money offered to the members and also the money deposited/paid to the SACCOS by the member. The book is stayed with the members.
Ledger Card –Is the card which has similar records as the pass book but in addition it also has the passport size (photos) for the members. The ledger card is kept in the office. It records all payments and deposits by the member loan offered and repayments.

8.2 Deposit Records.
Receipt book- The book for offering receipt for the received payments to the SACCOS.
Pass book – As seen above it records the deposits by the member. It is a member’s book kept by her/him.
Ledger Card- As seen above it records the deposits by the member. It is kept in the SACCOS office for reference.
Daily collection Record Keeping Book-It the book for recording daily collections such as loan repayment, penalties, entry fees, savings and shares paid to the SACCOS in that day.
Cash book- It records daily transactions by the SACCOS. (Records the money that is being deposited to the SACCOS and the ones paid by the SACCOS).
Daily book balance record book-It records the money remained in the SACCOS after all day payments. (It records money deposited, paid and shows the balance remained).
Cash Box book balance- Record the money kept in the cash box on daily basis. (It counts the number specific coins and notes and its values).
The main Ledger- The main ledger show all deposits and payments per month ( It records monthly income and expenditure).

8.3 SACCOS members record book.

This is the book which records the names for all members and their heirs and other important records for the members.

9. Reports and preparing periods.

The SACCOS prepares monthly financial and Statistical reports. The reports are sent to the District cooperative officer, World Vision Tanzania Zonal officer and a copy is remained in the SACCOS office.


10. The potential of Mombo Talanta SACCOS in alleviating Poverty in Mombo Division.

In assessing the potential of the SACCOS in alleviating Poverty , I looked at the products provided to its members, Conditions under which the product are offered and interviewed some SACCOS members who have been borrowing from the SACCOS. And observed tangible changes claimed by the members to happen due to SACCOS services.

The loans and the Interest.

The loans offered by the SACCOS are of two kinds. There the loans in which the members can borrow three times the amount of savings is having in the SACCOS.This loan has the interest of 20%.The other one the member can borrow up to twice the amount of their savings. The loan of this category has the interest of 10%. The different conditions for the loans as I see provides a comfortable situation to the beginners as their capital will shoot up faster due to a relief of 10% interest by so doing they will also move out of poverty at fast speed as well. The customers who feel that they want to expand their capitals faster there is also an opportunity for them as they can borrow the loans with the interest of 20%( ie. They can borrow three times the amount of their savings).

The loans offered for paying school fees enables the poor members to pay the school fees for their children. There no longer possibilities for them to fail to go to school due to lack of school fees.

The Interest rate charged for the loans are reasonable and affordable according to response from the interviewed members. They urged that the banks within their area (NMB Bank) charged up to 25% interests to the loans offered and the conditions for the loans are not affordable by the poor. They are affordable by the workers and progressive business persons. It was therefore also observed that the SACCOS conditions for loans are affordable by the poor and encourage them to borrow.

Some more interesting thing observed in the SACCOS is that there are members who joined individually and those ones who joined in group. The members who joined in group can get loans in group where by each member gets his or her loan but being in a group is liable for every ones loan in the group, and make sure every of his/her fellow retires the loan. This group lending encourages the poorest to be liable for loans however smaller they may be. It was leant in the observation that those group borrowers can grow up to the point that they are able to contribute for the personal share and savings as well as fees and having assets to be liable to join the SACCOS as Individual member and borrow as Individual member. This helps the poorer to come out of the poor. The SACCOS conditions for offering loans is broad accommodating almost people of all conditions in the operation area in order that they all have equal opportunities to borrow and work hard to alleviate poverty.

The SACCOS also provided loans for both Agriculture and business. The majority of the poor are engaging in Agricultural activities to get different needs, including food, school fees, medical services, housing and other needs. Accessing capital to expand their Agricultural activities is the potential service for the farmers to alleviate poverty.

The SACCOSS has variety of members ie. Workers, Farmers and Business persons increase its potentiality in addressing poverty to different groups of the people.

Changes observed to some Mombo Talanta SACCOS members Visited (Testimonies and Success Stories).

One Mama Lishe - Ratifa Saguti claimed her business to grow progressively, She started her business in a grass roofed hurt .But after she borrowed from the SACCOS according to her she rented a nice place for restaurant. Following that she is getting lot of customers and good profit from her business. She is now building a house of resident out of the profit she is making in the business.

Another customer Hilda Makuro who was visited and interviewed whether she is benefiting from the SACCOS she gave her testimony that she has been able to pay for college fees for her two children and bought a sisal farm of 2 hectors which is about to be harvested now.

The third customer Mr. Ali Saguti, he is doing carpentry he said that the loan from SACCOS enable him to expand his business Carpentry and increase his profit from the business greatly. Following he bought a lorry (canter ) and again borrowed from the SACCOS and added some accumulated profit from both carpentry and his lorry and bought a coaster min bus which is carrying passengers from Lushoto to Tanga via Mombo.
A success story from Mgeni Hussein-(Mombo Talanta SACCOS customer).
Title: Milk starts a retail shop.
“Mmh! You can not believe, see that retail shop, its milk”
Mgeni Hussein told me after she was asked whether she is benefiting from Mombo Talanta SACCOS, She told me that she borrowed Tshs.500, 000 from the SACCOS and bought a dairy cow incalf heifer. She continued that; “I do get 12 litres of milk per day from my cow, the customers are plenty, I do not satisfy them”
She started a retail shop from the money she got from selling milk at a capital of Tsh.200, 000 and slowly she added her capital from dairy milk sales.
“Am now able to take care of my parents and pay school fees for my young brothers” she is earning from both milk sales and return from her retail shop. “Sincerely I have benefited from the Mombo Talanta SACCOS” She said.


Mgeni Hussein in her Shop. Mgeni Hussein with her milk cow.
SUBJECT: A SUCCESS STORY FROM STEVEN SHEGWANDO.


Steven Shegwando, a farmer from Chepete Village told me that he was able to increase the size of his paddy farm from 1 acre to 5 acres, employing casual labors, and buying enough paddy seeds after he had took a loan from Mombo Talanta SACCOS. According to him, so long as he had not harvested the crops he could not explain how the loan has changed his life. However he planned to build a modern house after harvesting as he is expecting to get a good profit after the loan repayment.


Steven Shegwando in His Paddy far. ( A Mombo Talanta SACCOS Customer).

10: Weakness in terms of operations and reliability.
Members- Coverage.
The members who are benefiting from the SACCOS are few compared with the number of the people in Mombo Division. The SACCOS members are 243 and the total population in the area is 69047 thousands. The SACCOS has enough loan capital to serve many members than the members it has. In trying to find out why there no more members than it is expected. Majority of interviewed non SACCOS members seems not to be very much aware in the capacity of the SACCOS to meet their needs in the area. This reduces the opportunity for many people to be out of poverty using SACCOS.
Management.
There is a weakness of selfishness among board members. According to SACCO’s cashiers, some board members wanted to get more benefits than those approved in the business plan. This may result to misuse of SACCOS funds. However the cashiers do not allow any transactions out of business plan. It was also noted that there are some body members whose loans repayment period is overdue. This will minimize their courage in following up the people who are not paying loans as per schedule.
Auditing.
Since Inception the SACCOS has not been audited. This is against the cooperative management requirements. It is also against the constitution of the Mombo Talanta SACCOS as there is a part which says that the board shall appoint/find the external auditor who will audit the SACCOS financial books and operations. This hinders the clear understanding of the SACCOS performance by both members and the outsiders who may wish to join or deposit their funds there. The integrity and capacity of the SACCOS management is sometimes measured by the audit performance and it is the one who determine for more people to join the SACCOS or not.
Security Problem.
The security officers are not having guns. The may not be able to safeguard the SACCOS properties incase they are ambushed by the thieves with guns.
Record Keeping.
Financial recording are good. But the SACCOS lacks Fixed Asset book to record the fixed assets found in their office. This may expose the SACCOS fixed assets to loss.
Transport.
The SACCOS has no reliable transport to send money collected from customers to nearby bank. This endangers the safety of the SACCOS money when sending to Bank.
The repayment rate.
The repayment rate is only 85%. In trying to follow up as to why the repayment rate is not 100% the SACCOS cashier responded that there has been a weakness of giving a loan to some member before a thorough analysis of his business and integrity.

11: Ways to overcome the identified shortfalls.
Members- Few Members.
The Village, Ward and Division governments should take the initiative to sensitize their people to join Mombo Talanta SACCOS as it is the good opportunity to be used for poverty alleviation in the Division. The SACCOS also should find a means to increase its speed to market its products and services to the people.
Selfishness to Board members.
The Board members should be trained on good governance and steward ship. The supervision committee should enhance its supervision and take serious measures incase of any misappropriation of funds. For the board members who will be rigid to change the SACCOS general assembly should be informed for more action including dropping them and electing innocent members.
Lack of Auditing.
During business planning the budget for audit be included and a close follow up should be done by the board to make sure that the audit is done as per schedule. The SACCOS general assembly should demand for audit report before approving the new business plan.
Lack of guns for security.
The SACCOS board can follow the necessary procedures to obtain effective weapons (guns) from relevant authorities for security at the office.
Fixed Asset book.
The SACCOS Cashiers should buy a counter book for recording fixed assets at the SACCOS office.
Transport Problem.
The SACCOS plan to buy two motorbikes to solve the problem of transport is highly commended. This will solve the problem of transport in monitoring the customers business and sending money to the bank.
The repayment rate:
The SACCOS loan committee should make sure that they know the integrity of their customers and that their collateral can be enough to pay for the loans incase the customer fails to pay.

12. Conclusion:

Mombo Talanta SACCOS has good financial records. The SACCOS is also addressing effectively the issues of poverty. Different interest rates (10% and 20%), collateral (Group/ Individual collateral) and eligibility for membership ( i.e. Group or Individual membership) makes it exceptional in reaching customers of all levels of poverty and boost up their life standards. However the SACCOS members are few in spite of the efforts made by the SACCOS to sensitize for the more members to join the SACCOS. The few Members reduce the opportunities of the SACCOS to alleviate poverty to many people. The Government at Village, Ward and Division is expected to mobilize people effectively to join the SACCOS in order to benefit from its products to alleviate poverty.

Reference.

1. Chambo S.A (1994).Cooperative in poverty Alleviation.
2. Tanzania Cooperative Development Policy (2002)
3. Ofunguo ABC.Maadili na misingi ya Ushiirka.
4. Cooperative Societies Act. no 209 of 2003.
5. Prof.A.B.C Ofunguo: Circumstances in Savings and Credit Societies Started.