The impact of microfinance institutions on rural livelihoods: the case of village community banks in Bunda district – Tanzania
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Date
2011
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Sokoine University of Agriculture
Abstract
This research examined the impact of microfinance institutions on rural livelihoods
particularly in the case of Village Community Banks (VICOBA) in Bunda District -
Tanzania. The overall objective of the research was to engender information that would
help improve performance of the VICOBAs and livelihoods of the rural communities in
Bunda District. Specifically, this research identified the socio-economic factors that
determined participation in the VICOBA schemes, assessed the impact of VICOBA
schemes on the livelihoods of the beneficiaries and lastly, identified the problems facing
the schemes in the study area. A total of 130 randomly selected heads of households
consisting of 65 VICOBA beneficiaries and 65 non-beneficiaries were interviewed using
a semi-structured questionnaire supplemented by focus group discussions, key informants
and participant observations. Results indicated that age and total number of dependants
were the main socio-economic factors that determined participation in VICOBA. It was
also found out, in this research, that there was a significant improvement in livelihoods
among participating households compared to non-participating households in terms of
micro entrepreneur assets. Moreover, the research found that VICOBA schemes were
constrained with institutional problems like limited working capital, lack of
entrepreneurship skills, lack of security of deposits, poor financial record keeping and
lack of linkage with formal microfinance institutions. Based on these findings, the
research recommends that the government and other stakeholders should create a
regulatory framework enabling the community based microfinance services, like
VICOBA, to reach more marginalized rural communities so that they might improve their
well-being through financial services and other diversified products. Furthermore, the
VICOBA groups should be capacitated in terms of training, financial support and working
facilities, in order to improve their efficiency and effectiveness in serving the poor in rural
areas.
Description
Master's Dissertation
Keywords
Bunda, Microfinance, Institutions, Rural, Livelihoods