The inauguration of the Cooperative Bank of Tanzania Ltd earlier this week in Dodoma marks an important milestone in Tanzania’s cooperative movement. Expectations are high, fuelled by the widespread enthusiasm that accompanied the launch. There are good reasons for this excitement: cooperatives play a crucial role in Tanzania by supporting growth, empowering communities, and enhancing resilience in underserved sectors.
The importance of cooperatives in Tanzania is evident. In the 2022/23 harvest season, cooperatives sold produce worth TZS 1.56 trillion through Agricultural Marketing Cooperative Societies (AMCOS). Additionally, cooperatives generated approximately 154,000 direct jobs and around 500,000 indirect jobs by the end of 2023. Cooperatives also help smallholder farmers access markets, agricultural inputs and fair prices. In doing so, they shield farmers from the manipulation of middlemen and are a significant source of income.
At one time, Tanzania boasted the strongest cooperative sector in Africa. However, this position did not last long due to government policies and interference, which led to the dissolution of cooperatives in 1975, replacing them with state-run “Ujamaa Villages.”
The economic liberalisation of the 1980s and 1990s spurred the revival and reformation of cooperative societies. In 2003, the Cooperative Societies Act was enacted, allowing greater autonomy and improved regulation. These developments accelerated the growth of cooperatives. Today, Tanzania is home to 7,522 cooperative societies encompassing over 8.35 million active members across the agricultural, fisheries, finance, and mining sectors. Additionally, Savings and Credit Cooperative Societies (SACCOS) play a pivotal role in advancing financial inclusion in rural areas.
Tanzania has the potential to reclaim its position as Africa’s leading cooperative hub.
Tanzania has the potential to reclaim its position as Africa’s leading cooperative hub. It needs three key areas. First, it must improve governance by updating cooperative laws to reflect modern economic realities and reduce bureaucratic interference. Additionally, the roles of unions, government, cooperative leaders, and members must be clearly defined. Second, governance and accountability must be strengthened by establishing effective boards and ensuring that only competent and ethical managers are entrusted to lead cooperative unions. Individuals with a history of rent-seeking or a proclivity for corruption should have no involvement with cooperatives.
Finally, the government should support market linkages and value addition. There is no reason why cooperatives in sectors such as coffee, cotton, and cashew nuts should not develop value addition projects. The Amul Cooperative Dairy in Gujarat, India, offers a compelling example. With government backing, this cooperative ventured into value addition—processing milk into high-quality products like cheese and butter. They invested in brand development, and the “Amul” brand is now a household name not only in India but internationally as well.
Elly Manjale is an economic, business and development issues analyst based in Arusha who writes on economic, business, social and women concerns.
