LINKAGES BETWEEN SACCOS AND AMCOS

1.0 INTRODUCTION.
The purpose of this paper is to discuss the linkage between SACCOS and AMCOS and show relevance of each of them to the poor communities in Tanzania. Also to give examples for well known SACCOS and AMCOS.
This paper will define what are Cooperative and its principles under International Cooperative Alliance. Then SACCOS and AMCOS will be defined.
Also the discussion on the linkages of SACCOS and AMCOS will show how poor communities can pool their resources in terms of capital and form their own micro finance and agricultural marketing to compete with capitalists and creating wealth and marketing services to their members.
From the discussion the conclusion and recommendations will be drawn.
1.1 Definitions
1.1.1What is cooperative.
A cooperative is an association of persons who have voluntarily joined together for the purpose of achieving a common need through the formation of a democratically controlled organization and who make equitable contributions to the capital required for the formation of such an organization, and who accept the risks and benefits of understanding in which they already participate. (Cooperative Development Policy, 2002).
Cooperative may be classed into two main categories, according to their economic function:
Cooperative with inward functions which act on behalf of their members, obtaining for them goods or services which they need for their personal or professional requirements: consumer cooperatives buying together, credit cooperatives for people needing money, housing cooperatives for those wanting accommodation, etc.
Cooperatives with outward functions, which act in obtaining outlet for the activities of their member’s workers productive cooperatives, agricultural marketing cooperatives, doctors’ cooperatives, actor’s cooperatives.
A cooperative must have the following characteristics:
a) It must be an organization of the people.
b) It should be independent from any other forces.
c) It should be based on equality
d) There must be an economic objective behind that cooperation
e) The economic objectives must be for members
f) The members of cooperative are the owners, investors, users of the products and workers .

1.1.2What is a SACCOS?
Savings and credit Cooperative Society (SACCOS) defined as a credit society solely dedicated to the promotion of thrift among its members and the creation of a source of credit for them at competitive rates of interest through financial intermediation. (Saving and credit cooperative society regulation, 2004)
Also SACCOS can be defined as a financial organization owned and operated on a not for profit basis by its members.



1.1.3 What is AMCOS
Agricultural Marketing Cooperative Society (AMCOS) refers to cooperatives whose principal object is the business of supplying inputs for agricultural crop production the purchasing, processing, marketing and distribution of agricultural products. They are essentially based in rural areas.(Cooperative Society Act No 20, 2003)
Then; marketing cooperative can be defined as an organization of small producers who join efforts to have a central marketing post which also solve other purpose such as procuring inputs, joint bargaining, facilitating credit, transportation, warehousing and providing education/ skills for the improvement of the commodity which they produce. The organization can eliminate middlemen (merchants) who buy cheaply from individual producers and sell dearly to the market, thus generating profits, which could go either to the producer or the final buyers. (Prof. A.B.C Ofunguo)


2.0 How SACCOS And AMCOS Looks Like?
Both being cooperative entry:
SACCOS:
The provisions of the regulation state that:
-Credit societies shall be able to receive funds from their members, in the form of shares, savings and deposits. A credit society may also receive donations and loans.
-A credit society shall maintain deposits in a bank or financial institution supervised by the bank of Tanzania, or in securities issued by the Government or by the bank of Tanzania, for the amount of not less than 20% of its total savings and deposits.
-A credit society shall, at all times, maintain a minimal capital of Tsh. 5,000,000 and at least twenty members with full paid shares, in order to qualify for registration.
-Common bonds based on residential, associational and occupational.
AMCOS:
- Start with a minimum of fifty members and above
-Is essential to provide marketing for agricultural produce to members.

3.0 SACCOS And AMCOS Linkages
i) The linkage between SACCOS and AMCOS was established in the 19th century when credit unions were formed in order to provide working capital to their poor farming members. These members were also members of AMCOS, which were marketing their produces.
ii) SACCOS and AMCOS as cooperative organizations are peoples organizations formed due to the need of the peoples themselves. Members are decision makers and this is being
done during the member’s general meeting. The two organizations promote the majority of the poor people and disadvantage rural community.
iii) SACCOS and AMCOS operate under the same legal framework which is Cooperative Society Act No 20 of 2003, the Cooperative Societies Rules, 2004 and Cooperative Development Policy, 2002.
iv) SACCOS and AMCOS are geared to meet the needs of the members economically and they share profit equally according to the number of shares.
v) SACCOS and AMCOS must be created and observe International Cooperative Alliance’s Statement on the Cooperative identity which states that a cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled business.
vi) SACCOS and AMCOS play a key role per cooperative principles

4.0 Relevance Of AMCOS And SACCOS To The Poor Communities In Tanzania.
AMCOS
Agricultural marketing cooperatives play a significant role in Tanzania to the poor communities. With the majority of the poor living and working in the agricultural sector, these type of cooperatives offer an appropriate channel by which the incomes of poor farmers can be increased or stabilized. Such cooperatives provide farmers with the agricultural supplies they need, mechanisms for the sale of their produce and other essential services such as marketing, credit, insurance and transportation. Through mutual insurance and farm credit, members of cooperatives are better able to cope with failures and other emergencies.
By organizing themselves as cooperatives, small farmers can reap economies of scale through better access to inputs, sharing of common equipment and better access to markets.
The increased efficiency that agricultural cooperative achieve often place them in a better position to compete with larger business than an individual farmer operating in isolation. This is particular relevant in those sectors where farmers have to maintain their competitiveness in the face of increasing globalizations.
Through AMCOS the rural poor are able to mobilize for collective action and achieve better bargaining power as buyers and sellers in the market place.
SACCOS
Through SACCOS it’s where the promotion of thrift among its members and creation of a source of credit for its members at controlled rate of interest exclusively for provident or productive purposes.
Also thrift, developing the habit of putting some money aside as savings for use in the future.
SACCOS can also help in productive, income generating investments such as farming, craft institution, purchasing of milling machine etc.; which will help the members for acceptable social requirements like fees, medication.
5.Challenges For SACCOS And AMCOS
But most of the SACCOS and AMCOS that were formed facing a lot of challenges which make them not able to attain their objectives; hence those cooperatives will not be able to fight against poverty.
For SACCOS there are lack of internal auditing functions that led SACCOS to vulnerable fraud and poor internal control, Lack of skilled manpower to run the SACCOS according to their principles, also most of the SACCOS are unable to access loans from financial institutions because the interest rate is high.
For AMCOS ; many industrial enterprises based on the farming have been taken over by the large capitalist business which grip them like a vice. These businesses introduce new techniques and offer a much more dangerous form of competition to cooperatives than the old dispersed processing plants, which they have observed or eliminated.
The large modernized cooperatives must therefore adopt strategies, which are not very cooperative in spirit, in order to survive. Sometimes these strategies are contrary to the immediate interest of their members. They raise much of their capital internally, which means they cannot pay very high prices for the produce they market
6.0 Examples Of A Well Known AMCOS And SACCOS
i) Legho Mullo agricultural marketing cooperative society.

Legho is located in Kilema South Ward that has a population of 8,045 male and 8,268 females. Legho Mullo is located in a village that is estimated to have a population of 3,000 people. About 30% of the land in this village is owned by women few of them being widows and some of them inherited pieces of land. This is an exceptional case in such an area where men traditionally own land. This is a divergence from the traditional practice and thus it has an impact on the membership of the AMCOS.
Amount of coffee sold at Legho AMCOS in 1998/1999 in Tshs
344 87 23 Amount of coffee in Kgs were sold by 600 per Kg.

ii) MAMSERA Agricultural Marketing Cooperative Society.

The Society is located in Mamsera ward in Rombo district that has a total population of
246,479. Males are 116,856 and females 129,620. Mamsera ward has a population of
4,688 males and 4,956 females according to the 2002 population census.
The Society serves three villages that include Mamsera Juu, Mamsera Kati, Mamsera
Chini and the neighborhood Population of the three villages according to the 2003
census is as follows: Mamsera Kati 2345 people and 469 households, Mamsera Juu 2045
people and 409 households and Mamsera Chini 4690 people and 938 households.
The society deals mainly with coffee marketing. It assists the members in selling coffee directly to the Coffee Auction at Moshi that is coordinated by Tanzania coffee Board. Apart from coffee marketing the society has subsidiary activities that include operating a hardware shop and a brick making business.

iii) Msangeni SACCOS is a good example also; it is located in Mwanga district with 197 members with share worth Tshs. 1.7 million

6.0 Conclusion
Therefore SACCOS and AMCOS formed should adhere cooperative principles, rules and values for sustainability of those cooperatives which contribute directly to the alleviation of poverty through the economic and social progress of their members and employees and enhancing social fabric of the communities in which they operate.















Reference:

http://en.wikipedia.org/wiki/cooperative

Micro Finance Regulation And Supervision Resource Center (2004), SACCOS Regulations, Dar es Salaam.

The United Republic Of Tanzania (2003), Cooperative Society Act No 20. , Government Printers, Dar es Salaam

The United Republic Of Tanzania (2003), Cooperative Development Policy 2002,Government Printers, Dar Es Salaam.

www.agr.gc.ca/policy/coop/kitcoop/html