This study assesses the factors affecting the growth of micro finance institutions;
with a critical reflection on SACCOS in Morogoro Municipality. The study used a
sample of 121 respondents extracted from the total population of 206 people
including the managers, SACCOS‟s staff and borrowers. The study used descriptive
survey research design as well as using both Primary and Secondary data and
quantitative and qualitative approaches in its analysis. The primary data were
collected using interview and questionnaire while the secondary data were collected
using documentary analysis. The study assesses the effects of managerial skills and
training, loan repayment trends and business competition on the growth of the
SACCOS. The study finds that there was a general increase in the number of
SACCOS in Morogoro Municipality. However, the number of active SACCOS has
shown to decrease in the past two years. The reasons include; increase in bad debts,
poor loan repayment rate and decrease in SACCOS capital. Also, the study found
that there is a significant relationship between managers' skills and training and
SACCOS performance hence their growth. The managers in the SACCOS make a lot
of business and operational decisions, thus the skills and training are vital in arriving
at sound decisions if the SACCOS are to prosper.
Consequently, the study found that there are poor loan repayment rates in each
SACCOS; this was evidenced by the loan default rate given. This has caused the
liquidity of SACCOS to be poor hence affect the investment and other business
operations. Finally, the presence of other financial services providers has put a
standing challenge to the SACCOS hence affect the rate at which they grow. The
study found that the majority of borrowers seek financial services from other
providers. This may cause the SACCOS borrowers unable to pay their loans
promptly as a result of multiple borrowing. Basing on conclusion, it is
recommended that, for the SACCOS to perform better and hence grow there is a
need to adhere to address the issue of management knowhow, apply viable loan
recovery strategies as well as improving their services to encounter the business
competition. Also, there is a need to apply proper risks analysis techniques and
mitigation techniques to the credits to escape from loan defaults trap.