Measuring the impacts of cooperative membership on household income: A case study of Zanzibar

Abstract

Background: It is commonly acknowledged that cooperatives play important social functions that raise the standard of living for their members, particularly those who originate from rural, and low-income backgrounds.

Aim: This article aims to measure the impacts of cooperatives membership on household income taking Zanzibar as a case study.

Setting: The data used were directly collected from 217 cooperative members and 83 non-cooperative members.

Method: Descriptive statistics were used to analyse the demographic characteristics of the respondents. The probit model and propensity score matching (PSM) was used to analyse the impacts of cooperative membership on household income.

Results: The probit model findings show that there are four statistically significant factors affecting cooperatives membership, including gender, educational level, land ownership, and access to credit. In addition, PSM findings reveal that there is a disparity in income level between cooperative members and non-members. On average, cooperative members are able to generate more income than non-cooperative members by 28% per year.

Conclusion: The study concludes that, in order to expand the observed benefits to the population, cooperative growth needs proper backing. Because poverty has many different dimensions, it’s crucial to expand the organisations that help the poor while also utilising other support services to reduce it.

Contribution: The article serves as first empirical evidence to be conducted in Zanzibar, Tanzania. The findings will facilitate the amendment of the cooperative context, including tax reduction, extending loans and grants, and other favourable working conditions necessary for supporting the development of cooperative society.