Managing operational risk by savings and credit cooperative societies (SACCOs): the case of Ilala Municipality

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University of Dar es Salaam
Savings and Credit Cooperative Societies (SACCOs) ofter one of the best options for organizing theirself-help financial services. Although the history of SACCOs in Tanzania goes back to 1938 an enhance promotion came after independence. Improved small business policies and access to fianance through Microfinance institution will allow the business to grow and hence contribute to country economic growth. Operational risk arises from human or computer error within daily product delivery and services. This risk includes the potential that inadequate technology and information systems, operational problems, insufficient human resources, or breaches of integrity (i.e. fraud) will result in unexpected losses. The risk management is at the core of Basel II guidelines and essential to optimizing the performance of Microfinance Institutions. Risk management feed back loop describe key role and responsibility within MFIs (SACCOs) can follow in identifying any risk including the operational risk. The Social Statistics Software programme (SSSP) was used for data analysis and chi square was used to make interpretation of the quantitative data so that to test Hypotheses for this study. This study revealed that operational risk is a function of internal controls, information systems, employee integrity, and operating processes, the weakness in internal control and growing size of SACCOs are the main cause of operational risk. The size and capabilities of committees to manage SACCOs profitable are questionable in most SACCOs, while some SACCOs do not have permanent employed staff or human resource development plan. Effective operational risk management allows SACCOs to capitalize on new opportunities and minimize threats to their financial viability. This will be possible if the Regulatory authority will revised the framework for supervising SACCOs activities
Available in print form, EAF Collection, Dr. Wilbert Chagula Library, (THS EAF HG3751.3.P5)
Operational risk, Credit management, Financial companies - SACCOS, Ilala, Dar es Salaam
Pius, G (2005) Managing operational risk by savings and credit cooperative societies (SACCOs): the case of Ilala Municipality. Master dissertation. University of Dar es Salaam