Influence of Demographic Factors on Loan Portfolio Quality in the Savings and Credit Cooperatives Societies in Tanzania

Abstract

This study determined the influence of demographic factors on loan portfolio quality in Tanzania, focusing on the Hazina SACCOS. The sample of the study was 134 out of 423 borrowers from Dar es saalam and Dodoma cities, whose loans did not exceed Tanzanian Shillings 5 millions. Only 100 questionnaire sheets were returned. Out of those, only 75 were correctly filled, hence used for analysis. Data analysis took place through descriptive and regression analysis. The study concludes that demographic factors affected loan portfolio in different ways. While female borrowers had higher loan repayment rates than their male counterparts, younger, employed, business operators and married borrowers repaid their loans earlier than their counterparts, which promoted the loan portfolio quality. Borrowers with higher education and more dependents had a loan repayment challenge, which weakened the loan portfolio quality. Therefore, loan profitability relates with demographic factors. In order to promote earlier loan repayment, hence loan portfolio quality, the SACCOS should offer demographic-centric financial products and support programs. The SACCOS should offer loans to meet the employment diversity, including flexible loan terms to accommodate wage-employed, self-employed and other employed members. Tailored financial counseling, flexible loan terms and practical financial management training could help mitigate the negative impacts observed in the study.