Effects of Village Community Bank (VICOBA) on business outcomes in Tanzania: a case study of Kigoma Municipal

The major purpose of this study was to examine the effect of Village Community Bank (VICOBA) on business outcome in Kigoma Municipal, Tanzania. The study adopted a crosssectional research design to gather data from both VICOBA (Village Community Banks) members and non-members. The data collection process involved the use of structured questionnaires and semi-structured interviews with key informants. In the case of the study approach, a mixed-method approach was employed, encompassing both quantitative and qualitative methods where the qualitative data was collected through semi-structured interviews with key informants and focus group discussion, while quantitative data was gathered from households using structured questionnaires administered through surveys. By using a cross-section data of 103 respondents comprising of 68 members and 35 nonmembers of VICOBA, 1 key informant and 3 FDGs in Kigoma Municipal, Tanzania, the data were obtained and used for analysis. The logistic regression analysis was done to examine the factors determining the participation in VICOBA, effect of VICOBA membership on business ownership and effect of VICOBA membership on saving at the Bank. The result suggests that the probability of the members to join VICOBA increases with awareness to VICOBA, female head of the family, Christian religious affiliation and main occupation (selfemployment). The probability of members to own business increases with VICOBA membership, type of occupation(self-employment), female headed household and awareness to VICOBA. Also, the probability of saving at the bank increases with VICOBA membership while decreases with household size and engage in self-employment. The multivariate linear regression analysis was done to examine the effect of VICOBA on business income and amount of saving. The result indicated the positive relationship on VICOBA membership, female headed household and negative relationship with household size. The analysis on amount of saving, shown the positive relationship in official position, primary education, married individual and widowed. The information gathered from key informants and Focus Group Discussions (FDGs) clarify on the various ways in which members benefit from their involvement in Village Community Banks (VICOBA) at the same time highlighting the problems VICOBA might face in reaching its goals. The result of this findings would be useful as it will raise awareness to the Government and other institutions involved with VICOBA and similar microfinance initiatives to integrate the VICOBA development agenda into the National Poverty Reduction Strategy, as well as review and improve microfinance policies and strategies to better support small businesses.