IMPACT OF ROTATING SAVINGS AND CREDIT ASSOCIATION (ROSCA) ON THE PERFORMANCE OF MSMEs IN ANAMBRA STATE

Abstract

This study examined the impact of rotating savings and credit association (ROSCA) on the performance of micro small and medium scale enterprises in Anambra State: a case of Idemili South and Aguata Local Government Area. The study employed the Transaction Cost Theory to explain the relationship between ROSCA and the performance of MSMEs in Anambra State. A sample of 400 ROSCAs members were drawn from both local governments using purposive random sampling. Data were analysed using frequency, percentages and binary logit regression analysis for inferential statistics. The result of findings revealed that membership of ROSCA has the likelihood of 642.3 percent (7.423 odd ratio) to improve MSMEs performance in Anambra state. In addition, the study showed that access to credit from formal financial organisation has the potential (not significant) likelihood of 93.2 percent to reduce MSMEs performance in Anambra state. Finally, the result of findings showed that access to government special intervention funds for MSMEs has the potential (non-significant) likelihood of 62.6 percent to improve MSMEs performance in Anambra state. Based on research findings, the study made the following recommendations among others: Government and its financial regulatory agency should adopt policy that will integrate ROSCAs with formal financial institutions rather than seeking to eliminate them.