(The case of Gamo Gofa zone, SNNPRS)

Transcription

1 Assessment of Factors affecting Saving Practices of Members of Rural Saving and Credit Cooperatives (The case of Gamo Gofa zone, SNNPRS) Presentation for the National Conference on Cooperatives Development in Ethiopia Hawassa University BY: GIZEWORK MESSELE MAY, 2015

2 PRESENTATION OUTLINES :- 1. Background of the study 2. Statement of the problem 3. Objectives of the study 4. Research questions 5. Research Methodology 6. Results and Discussion 7. Conclusions and recommendations

3 BACKGROUND OF THE STUDY Rural saving and credit cooperatives are one of the financial institutions working in rural area which are more accessible and affordable for rural poor individuals. They have been providing financial services to their members by focusing on saving and credit products.

4 BACKGROUND OF THE STUDY The literature reveals, apart from the existence of suitable financial intermediation, there are also different factors that can affect saving decision of individuals. In this study different individual as well as institutional factors are included in assessing their relationship with savings of members of RuSACCOs.

5 STATEMENT OF THE PROBLEM There are different financial institutions working in the country. Among them rural saving and credit cooperatives (RuSACCOs) are the one. They are member owned financial institutions in which membership is open and voluntary. They provide savings facilities and credit at cheaper cost and on more favourable terms than that of other financial institutions (Nwachukwu, and Odigie, 2009).

6 STATEMENT OF THE PROBLEM Despite their accessibility and affordability for the rural poor individuals, they have not been mobilizing savings from their members efficiently. There has been: Lack of consistent training or financial education for members; Limited capacity of RuSACCOs to provide diversified saving and loan products; Low and irregular income pattern of rural people Low saving interest rate

7 OBJECTIVES AND QUESTIONS OF THE STUDY General Objective To assess factors affecting saving practices of members of rural saving and credit cooperatives (RuSACCOs) in Gamo Gofa zone of SNNP regional state. Research Questions Do the level of annual income, credit access, and training participation, affect members saving practice? What is the relationship between saving before membership and family members contribution for their livelihood and saving practices of members? What is the relationship between demographic variables and saving practices of members of RuSACCOs?

8 RESEARCH METHODOLOGY Research Design a non- experimental survey research design was applied. Sample size and sampling techniques: Using the formula developed by Yamane (1967) out of 31,758 members 395 were selected. Purposive and random sampling method were used. Methods of data collection and analysis: Both primary and secondary data were used in the study. Response rate of 97.75% was achieved. Multiple linear regression model has been employed In all the analyses, confidence level was held at 95% and P<0.05 was set for significance. Descriptive statistics were also used to further analyse and elaborate the findings.

9 RESULTS AND DISCUSSION Descriptive: demographic charx Out of 391 respondents, 292 were males and 99 were females, which constitutes almost 75% and 25% respectively. 93% of the respondents were married. Respondents in the study on average were about 42 years old. The average family size of the respondents was 7.

10 RESULTS AND DISCUSSION Multiple regression analysis Explanatory /Independent/ Variables Un-standardized Coefficients t P value. B (Constant) Age of responder Family size Education status Dependency ratio Annual Income Credit received Training received Family member Contrbn. For livelih

11 RESULTS AND DISCUSSION Four statistically significant variables are revealed in the study: Training: The result of the study revealed that there is a strong positive relationship between training and savings of members with beta coefficient of When a member attends a training, his/her saving level will increase by Birr

12 RESULTS AND DISCUSSION Education status: As the education level of a member increases, saving is expected to increase by Birr 9.92 holding other factors fixed. It is revealed that as rural individuals become literate, they become aware of the benefits of savings due to this, their saving level will increase.

13 RESULTS AND DISCUSSION Credit: In this study it was found out that credit has a significant positive effect on savings of members. Holding other variables constant, as credit received is increased by Birr 100 saving of the member is expected to increase by Birr 16.2.

14 RESULTS AND DISCUSSION Income: In most literatures, income is considered to have a strong explanatory power in explaining individual savings. Holding other variables constant, when income of a member increases by Birr 100, then saving is expected to increase by Birr 1.8. The result agreed with a study conducted in Kenya which shows a statistically significant relationship between intervening variables (income) and savings (Cheruiyot et al, 2012).

15 CONCLUSION AND RECOMMENDATION Conclusions: The study found out four statistically significant variables: training, education status, credit, and income level of the respondents with beta coefficients of 68.76, 9.92, 0.162, and respectively. It is revealed that rural poor individuals can save if : they are provided with customized trainings and appropriate financial products like credit availability as per their need and; In addition, their income level and education status have an effect on their saving level

16 CONCLUSION AND RECOMMENDATION Thus, saving practices among the poor individuals or memgers are not only attributed to individual characteristics and decisions, but also it is attributed to the existence of appropriate institutions and financial products suitable for their choices.

17 CONCLUSION AND RECOMMENDATION Recommendations: Based on the results of the study the following points are recommended: As it has a significant relationship with saving, RuSACCOs members should be well provided with trainings especially financial ones. The capacity of credit provision of RuSACCOs should be improved in the amount and term of the credit.

18 CONCLUSION AND RECOMMENDATION By creating linkage between RuSACCOs and other financial institutions like micro finance institutions it is possible to increase loanable funds. In addition, RuSACCOs and other stakeholders should influence members income through:- making credit accessible and enable members participate in income generating activities.

19 Thank you!