The Impacts of Credits Risk Management on Profitability of Rural Savings and Credits Cooperative Societies (SACCOS) : The Case Study of Tanzania

This study was conducted from 37 rural SACCOS in Morogoro, Dodoma and Kilimanjaro regions in Tanzania to assess the influence of credits risk management on rural SACCOS' profitability. The study applied univariate regression model where ROA and ROE were the proxies for profitability and Non Performing Loans ratio (NPL) was used as the proxy for credit risks management. This study found out that 70% of rural SACCOS were making loss because they lacked effective credits risk mitigation techniques. The findings also noted the maximum and average loss of 315 and 5 million TSHs respectively. The study further revealed that the credit risk management significantly influenced the profitability of rural the SACCOS. Based on the findings of this study I recommend that rural SACCOS should apply the effective credit risks mitigation techniques, be keen in credits' processing, monitoring and follow-up, issue loans only to qualified borrowers and establish insurance cover for loans. Furthermore, I recommend that the government should continue to regulate and supervise the rural SACCOS in Tanzania