Effect of Outreach on Operational Sustainability (Oss): Study in Saccos in Aa.
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Date
2025-09
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Addis Ababa University
Abstract
This study investigates the effect of outreach on operational sustainability in Saving and Credit Cooperatives (SACCOs) in Addis Ababa, Ethiopia, with the primary objective of assessing how key outreach variables number of members (NM), women borrowers (NWB), average loan size (AVL), savings (AVS), and loan-to-asset ratio (LtA) impact operational self-sufficiency (OSS). The research holds significant implications for policymakers, SACCO managers, and development practitioners by providing empirical evidence to balance financial sustainability with social outreach goals. Using a quantitative approach, the study analyzed panel data from 2012–2016, drawing a purposive sample of 69 audited SACCOs (from a sampling frame of 252) to ensure data reliability. Secondary data from 49 SACCO audited financial reports and annual statements were employed, and a mixed descriptive-econometric analysis was conducted using SPSS. The findings reveal that while larger membership (NM) negatively affects OSS due to operational inefficiencies, women borrowers (NWB) significantly enhance sustainability, likely due to higher repayment rates. Average loan size (AVL) and savings (AVS) show modest positive effects, whereas the loan-to-asset ratio (LtA) is the strongest predictor, with an optimal range (0.6–0.8) maximizing financial health. The study challenges the conventional trade-off narrative, demonstrating that strategic management can reconcile outreach and sustainability. Recommendations include: (1) controlled membership growth to avoid overextension, (2) gender-inclusive lending policies to diversify risk, (3) maintaining an optimal LtA ratio to balance liquidity and profitability, and (4) adopting digital tools to reduce administrative costs. For policymakers, the study advocates regulatory frameworks that incentivize gender inclusivity and set benchmarks for LtA ratios. By aligning social missions with financial viability, SACCOs can enhance their dual role in poverty alleviation and economic resilience.
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Keywords
SACCOs, Operational Sustainability, Outreach, Gender Inclusion, Trade-off.