THE ROLE OF VICOBA IN IMPROVING LIVELIHOOD AMONG LOW INCOME
EARNERS: A CASE OF SELECTED WARDS IN ARUSHA DISTRICT
JOSEPH J. MASSAWE
MBA Dissertation
Institute of Accountancy Arusha
November 2020 THE ROLE OF VICOBA IN IMPROVING LIVELIHOOD AMONG LOW INCOME
EARNERS: A CASE OF SELECTED WARDS IN ARUSHA DISTRICT
BY
JOSEPH J. MASSAWE
NOVEMBER, 2020
The work contained within this document has been submitted by the
student in partial fulfillment of the requirement for the award of the Master
of Business Administration
CERTIFICATION
I, the undersigned certify that I have read and hereby recommend for acceptance by Institute of Accountancy the research proposal entitled: Application VICOBA in Improving
Livelihood Among Low Income Earners: A Case of Selected Wards in Arusha District in fulfillment of the requirements for the degree of Masters of Business Administration offered at the Institute of Accountancy Arusha.
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(Supervisor Signature)
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(Supervisor Name)
Date ………………………………
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DECLARATION
I, Joseph Massawe, declare that this research proposal is my own original work and that it has not been presented and will not be presented to any university for similar or any other degree award.
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Date…………………………………..
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COPYRIGHT
This paper should not be reproduced by any means, in full or in part, except for short extract in a fair dealing, for research or private study, critical scholarly review or discourse with an acknowledgement. No part of this dissertation may be reproduced, stored in any retrieval system, or transmitted in any form or by any means without prior written permission of the author or The Institute of Accountancy Arusha.
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DEDICATION
To my Parents Mr. & Mrs. Massawe for their continuous encouragement and sacrifices made during the entire of my studies, My friend, Mercyline Lema and all brothers and sisters who were inspiration to me through their prayers also deserve credit for their contribution to the success of this study.
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ACKNOWLEDGEMENTS
Let me close my eyes and genuflect down to thank my Almighty God for His un-measurement and unquantifiable blessing awarded to me so that to accomplish this work.
I am allocating special sincere thanks to my parents Mr. & Mrs Massawe who assists me on financial and encouragement support on making sure that I prepare this research proposal on efficient and correct way. Without his assistance and encouragement, I do not think that I would have come this far.
I would like to thank Mr. Edson, N. for the support, guidance and encouragement that he gave me throughout the project.
The researcher also wishes to extend his profound gratitude to all the individuals who participated in the research process in one way or another but have not been mentioned by names or designations
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ABSTRACT
This study sought to examine the results of VICOBA in improving livelihood among low income earners in Arusha District. This study deployed survey research design and a quantitative research approach in data collection. Simple random sampling technique was used to reach 70 participants from whom relevant data were obtained through questionnaires.
SPSS version 25 was used to process the data. The findings of this study unveiled that
VICOBA provide entrepreneur skills financial literacy, Insurance, raw materials and provide business capitals to them. Findings show that VICOBA services provide better housing, food security, raise of business profiles, income, as well as improvement in education to children of the members. The study recommends that Government should ensure better education to the
VICOBA members so that they can effectively and efficiently perform their activities. Also, since only a single data collection instrument was employed, future research through interviews could be undertaken to triangulate.
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LIST OF ABBREVIATIONS AND ACRONYMS
CARE Cooperative for Assistance and Relief Everywhere
IAA Institute of Accountancy Arusha
IGAs Income Generation Activities
SEDIT Social and Economic Development Initiative of Tanzania
SHG Self Help Groups
SPSS Statistical Package for Social Science
URT United Republic of Tanzania
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TABLE OF CONTENTS
CERTIFICATION ...... i
DECLARATION...... ii
COPYRIGHT ...... iii
DEDICATION ...... iv
ACKNOWLEDGEMENTS...... v
ABSTRACT ...... vi
LIST OF ABBREVIATIONS AND ACRONYMS ...... vii
TABLE OF CONTENTS ...... viii
LIST OF FIGURES ...... xi
LIST OF TABLES ...... xii
CHAPTER ONE...... 12
INTRODUCTION ...... 2
1.1 Introduction ...... 2 1.2 Background to the Study ...... 2 1.3 Statement of the Problem ...... 5 1.4 Research Objectives ...... 6 1.4.1 General objective ...... 6 1.4.2 Specific Objectives ...... 6 1.5 Research Question...... 7 1.6 Scope of the Study ...... 7 1.7 Limitation of the Study...... 7 1.8 Significance of the Study ...... 8 1.9 Organization of the Study ...... 8 CHAPTER TWO ...... 9
LITERATURE REVIEW ...... 9
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2.1 Introduction ...... 9 2.2 Definition of the Concepts ...... 9 2.2.1 VICOBA ...... 9 2.2.2 Livelihood...... 9 2.2.3 Village ...... 9 2.2.4 Community ...... 10 2.2.5 Bank ...... 11 2.2.6 Community Banks ...... 11 2.3 Theoretical Literature Review ...... 11 2.3.1 The Bucket Theory of Financial Management ...... 11 2.2.2 Effective Market Theory ...... 13 2.3.3 Village Banking Model ...... 13 2.4 Empirical Literature Review ...... 14 2.4.1 Services provided by VICOBA ...... 14 2.5 Research Gap ...... 19 2.6 Conceptual Framework ...... 20 CHAPTER THREE ...... 22
RESEARCH METHODOLOGY ...... 22
3.1 Introduction ...... 22 3.2 Research Design ...... 22 3.3 Area of the Study ...... 22 3.4 Research Approach ...... 23 3.5 Population ...... 24 3.6 Sample Size and Sampling Techniques ...... 24 3.6.1 Sample size ...... 24 3.6.2 Sampling Technique ...... 25 3.7 Data Collection Methods ...... 26 3.7.1 Primary Data...... 26 3.7.2 Secondary Data...... 27 3.8 Data Analysis ...... 27 3.9 Validity and Reliability ...... 27 3.9.1 Validity ...... 27 3.9.2 Reliability ...... 28 3.10 Ethical Considerations ...... 28 CHAPTER FOUR ...... 30
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PRESENTATION AND DISCUSSION OF FINDINGS ...... 30
4.1 Introduction ...... 30 4.2 Presentation of Findings ...... 30 4.3.1. Demographic Information ...... 30 4.3.2 Services provided by members of VICOBA ...... 32 4.3.3 Outcomes of services undertaken by VICOBA ...... 34 4.3.4 Situation of the members Before and After joining VICOBA ...... 36 4.5 Relationship between VICOBA services and livelihood improvement...... 37 4.6. Discussion of Findings ...... 37 CHAPTER FIVE ...... 40
SUMMARY, CONCLUSION AND RECOMMENDATIONS ...... 40
5.1 Introduction ...... 40 5.2 Summary of Findings ...... 40 5.3 Conclusion ...... 41 5.4 Critical Evaluation of the Study ...... 41 5.5 Policy Implication and Recommendations ...... 41 5.6 Areas for Future Research...... 42 REFERENCES ...... 44
APPENDICES ...... 51
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LIST OF FIGURES
Figure 2.1: Conceptual Framework showing independent variables and dependent variable. 21
Figure 3.1: A map showing the location of Arusha District...... 23
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LIST OF TABLES
Table 3.1 : Targeted Sample Size ...... 25
Table 3.2: Reliability Statistics ...... 28
Table 4.1: Demographic Information ...... 31
Table 4.2: Services provided by members of VICOBA ...... 33
Table 4.3: Outcomes of services undertaken by VICOBA ...... 35
Table 4.3 Situation of the members Before and After joining VICOBA...... 36
Table 4.4 Relationship between VICOBA services and livelihood improvement ...... 37
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CHAPTER ONE
INTRODUCTION
1.1 Introduction
This chapter gives a general overview and introduces reader to the topic of the results of
VICOBA in improving livelihood among low income earners in Arusha District. It also gives the problem and the justification of the study. It presents the research objectives, questions, and the limitations of the study. It finally ends up by highlighting the significance and the organization of the study.
1.2 Background to the Study
Village Community Banks (VICOBA) play an important role of enabling the poor save and access credit. Microfinance has become a buzz word in the credit markets as an effective tool for poverty reduction and socioeconomic development; yet, the impact is still questioned and varies from one country to another and from urban, peri-urban to rural areas (Salum, 2017).
Historically, the microfinance sector has evolved and developed according to different patterns and growth paths in various countries and regions. Village Community Banks (VICOBA), like other micro-finance institutions, are considered to be „bankable‟ micro-financial institutions for improving livelihoods of the poor in rural and urban areas (Rutenge, 2016). VICOBA, like other microfinance institutions, operate worldwide though in different names. For instance in Asia,
India and Bangladesh they are known as Self Help Groups (SHG). In Mozambique they are known as OPHIVELLA; in Uganda and Zanzibar they are known as JENGA and JOSACA respectively (Ngalemwa, 2013). Moreover, VICOBA have proved to be the most effective lending model in Niger where they were established in 1991 which is literally translated as
„women on the move‟, founded by CARE International Niger (URT (2017).
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Microfinance Initiative was established in Africa as cooperation between the public authorities and private investors in developed countries. The mission was to contribute to the empowerment of poor people (exclusively rural poor) and to the creation of jobs, wealth and economic social sustainability. International organizations invested in MFIs were whether in more mature and large or in young and emerging MFIs in Africa. Some countries included are
Nigeria, Ghana, Cameroon, Senegal, Mali, Tanzania, Uganda and Kenya (Haule, 2015).
In Tanzania, the acronym VICOBA‟ for Village Community Bank was coined in September
2017. Social and Economic Development Initiative of Tanzania (SEDIT), CARE and The
World Conference Religion and Peace (WCRP) are the major organizations that participated in coming up with the VICOBA concept and its acronym. The background of the acronym is a
CARE international model developed in Niger, West Africa in 1991 (URT, 2017). It was introduced to reduce poverty to widow (women without husbands) and increase family income.
Women were living having family responsibilities like paying schools for their children, food, house rents and other social life. Some men ran away from their families, other were irresponsible and so forth. From Zanzibar VICOBA extended to Tanzania Mainland through
Mtwara, Lindi and Rufiji district. Later on spread to all over the country (Kinisa, 2019). Village
Community Banks (VICOBA) is structured in such a way that poor people especially those in the rural areas, are organized in groups and trained in various skills so as to build up their capacity to fight against poverty.(URT, 2017). VICOBA holds a strong belief that even poor people have skills, capabilities and abilities which when unleashed and utilized effectively can help them to attain and improve their economic development and social welfare
Many studies have been conducted in Tanzania assessing the impact of VICOBA in improving livelihood of people. In his study on assessing the contribution of Village Community Bank on
Household Welfare: A Case Study of Kishapu District, Shinyanga, the findings indicated
VICOBA plays a great role in reducing poverty and vulnerability of the poor. VICOBA lending
3 model is a unique and an effective tool for development of rural communities. Like many other micro-finance institutions, VICOBA helps people 68 start and manage IGAs, and also they are capacitated to save, take loans and reimburse on time. Similarly, Salum (2017) who conducted a study on the influence of village community banks on livelihood outcomes in
Rorya district found that, communities have been enjoying the presence of VICOBA as other districts in Mara Region with some outstanding stories of how poor community managed to improve their income and livelihood at large. However useful they are, it seems unclear in many of these studies on the levels of livelihood outcomes in terms of income, food security and shelter (housing).
Furthermore, Kinisa (2019) who conducted a study on assessment of the impact of VICOBA in poverty alleviation: A case of Babati Rural District affirmed that despite of the contribution of
VICOBA in improving livelihood of people still there were challenges facing VICOBA including; low skills of bookkeeping (record keeping) and low entrepreneurships kills. Kasilo et al (2005) argues that in some cases husbands misuses loans received by their wives and some husbands do not support their wives in relation to VICOBA activities. On the same note,
Haule (2015) in his study on contribution of village community banks in household rice production: A case of Morogoro District indicated that agriculture development especially household rice production was supported by VICOBA where they accessed training and the loans. Small rice farming households need continuous training on saving, participation in training and on how to use better farming methods, improved seeds and other agricultural inputs such as fertilizer, pesticides and insecticides. Chipindula and Mwanga (2015), also indicated that revealed that VICOBA saving and lending model is a unique and most effective tool for development of rural communities because rural people are engaging much in agricultural development. Kihongo (2005) on the other hand stipulated that;
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The strength of VICOB has been revealed in various areas including: favorable joining and loan acquisition procedures and acceptable interest rates, gender inclusiveness and gender roles in the groups, capacity building to empower the participant to adequately meet the economic challenges of the business sector, increases the members ' income levels , wider impact in case of availability of matching loan in time and spillovers/externalities and easier to manage and achieve sustainability in credit provision and the participants' income generating activities (P.11).
Lushakuzi, Killagane and Killagane (2017) conducted a study on Village Community Banks
(VICOBA) and members‟ business sustainability: Case study of Kunduchi Ward at Kinondoni
District in Dar es Salaam, the findings indicated that VICOBA can play a great role in reducing socioeconomic hardship of the poor. Also its lending model is unique and an effective tool for development of communities through encouraging and advising members to invest in IGAs with good productive potential. However, provision of credits alone to the members without business skills and supervision will not be possible for enterprises to perform at optimal level.
Therefore, VICOBA have to be closer with the members in each stage of their development.
The above literatures gives an evidence that VICOBA has significant contribution in promoting the livelihood of people. This study therefore seek to assess the impact of VICOBA in improving livelihood specifically to the low income earners in Arusha District.
1.3 Statement of the Problem
There has been a significant growth in the Cooperative financial sector including Vilage
Commercial Banks. Tanzania has played various efforts in supporting the small businesses in the country; through the establishment of Small Industries Development Organization (SIDO) and Vocational Education Training Authority (URT, 2017). Many VICOBA were established to enable small business traders become accessible on how to get funds so as to run their businesses. VICOBA have important roles of reducing poverty among its members and the
5 general public in Arusha District. Therefore, many VICOBAs have been established to rescue the problem of poverty (Sizya 2018). Despite the initiatives taken by the Government and the tremendous growth of VICOBA in Arusha District, low income earners have continued to suffer. This situation has caused a greater concern on the role of VICOBA in improving livelihood among low income earners (Richardson and Finnegan, 2018). The problem has remained unsolved; low income earners are still poor and their businesses are not growing as they were expected. Despite of having a number of VICOBAs in the District, low income earners face a challenge of lack of access to credit and this situation hampers their Growth and Sustenance. Lyimo (2018) asserted that the lack of finance is the challenge facing entrepreneurs especially women. Therefore, this study examined the role of VICOBA in improving livelihood among low income earners in Arusha District.
1.4 Research Objectives
1.4.1 General objective
The general objective of this study is to examine the role of VICOBA in improving livelihood among low income earners in Arusha District.
1.4.2 Specific Objectives
The study had the following specific objectives
i. To identify the services provided by VICOBA to its members in Arusha District
ii. To determine outcomes of services undertaken by VICOBA members in terms of food
security, income and housing quality in Arusha District
iii. To establish the relationship between VICOBA services and livelihood improvement
among low income earners in Arusha District
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1.5 Research Question
i. What are the services provided by VICOBA to its members in in Arusha District?
ii. What are the roles of services undertaken by VICOBA members in terms of food
security, income and housing quality in Arusha District?
iii. What is the relationship between VICOBA services and livelihood improvement
among low income earners in Arusha District?
1.6 Scope of the Study
The proposed study examined the role of VICOBA in improving livelihood among low income earners in Arusha District. The study purposely examined the services provided by VICOBA in in Arusha District, determine outcomes of activities undertaken by VICOBA members in terms of food security, income and housing quality in Arusha District and establish the relationship between VICOBA services and livelihood improvement among low income earners in Arusha
District. Data was gathered from VICOBA members from the selected Wards of Arusha
District.
1.7 Limitation of the Study
One of the limitations is that the research is expecting to encounter is that: some of the respondents may not understand the questions and may have ended up give misleading information. To counter this challenge, the language used to set questions was simple and direct to ensure that respondents don’t misinterpret them. Getting the respondents to answer the question thoughtfully and honestly may also be a challenge in the study. However, the researcher gave brief introduction of the study to sensitize respondents on the purpose of the study respondents was also not be required to write their names on the questionnaires.
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1.8 Significance of the Study
This study will be significant in the sense that; will add knowledge on the area of Village
Community Banks (VICOBA) in relation to the low income earners livelihood. The study findings shares useful insights to policy makers to address policy issues relating to poverty alleviation. The findings will give awareness among the low income earners in Arusha District on VICOBA opportunities in improving their livelihood. The findings will also provide an understanding of the existing position of VICOBA in improving the livelihood of its members in
Arusha District. The study will form the basis for further studies with regard to VICOBA and people livelihood. The study will fulfill the researcher‟s requirement for graduating his master‟s
Degree. The study will also form the basis for further studies on the area of VICOBA and livelihood of low-income earners.
1.9 Organization of the Study
This study comprises of five chapters. Chapter one unveils the problem which informs the study and its context. It provides the justification for the study. Chapter two presents a review of relevant literature, synthesis and research gap to the study. Chapter three describes the research methodology and procedures of data collection and analysis. Chapter four entails data presentation, analysis and discussions, while chapter five provides the summary, conclusions and recommendations of the study. References and appendices cover the last part of the study.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter presents a review of the literature related to impact of VICOBA in improving livelihood among low income earners. The chapter involves the definitions of concepts, theoretical and empirical literature review, conceptual framework as well as the research gap.
2.2 Definition of the Concepts
2.2.1 VICOBA
VICOBA is the reflection of Grameen bank model of Bangladesh and Sewa Bank of India, structured in such a way that people especially in rural areas are organized in groups, trained self-awareness, entrepreneurship skills, financial literacy, and other skills, then given loan, for income generation activities and investment to create growth (Likokola, 2015).
2.2.2 Livelihood
Livelihood refers to the persons‟ means of securing the basic necessities of life. Livelihood is defined as a set of activities essential to everyday life that are conducted over one's life span.
Such activities could include securing water, food, fodder, medicine, shelter and clothing. An individual's livelihood involves the capacity to acquire aforementioned necessities in order to satisfy the basic needs of themselves and their household (Wikipedia, 2016).
2.2.3 Village
A village refers to a small community or group of houses in a rural area, larger than a hamlet and usually smaller than a town (Oxford, 2008). Through often villages are located in rural areas, they are normally permanent, with fixed dwellings; however, temporary village can occur. Further, the size of the population in rural areas range from a few hundreds to few
9 thousand (sometimes tens of thousands). In Tanzania, a village was known as Ujamaa village.
It was first used by President Julius Nyerere in 1967 to refer to settlements where people would: live and work together for the good of all (Dean and McHenry, 1981). According to URT
(1997b) a village means a village registered as such the local Government (District
Authorities) Act No. 25, 1982. In this study, a village is a clustered human settlement or community, larger than a hamlet but smaller than a town where dwellers are fairly close to one another, not scattered broadly over the landscape as a dispersed settlement.
2.2.4 Community
Community is defined as a group of people with common needs, while United Nation
Development Plan (UNDP) defined community as group of people living in a geographically defined, or a group that interacts because of common social, economic, or political interests
(TASAF, 2005) .Oxford (2008) defines community as group of people living in the same place or having a particular characteristic in common, or it can be a group of people living together in one place especially one practicing common; or it can be a group of people living together in one place especially one practicing common ownership. Community does contain interest groups and they are made up of individuals who make them up. The individual men, women and children, some rich, some poor, do not just co-exist in a shared space. They interact in many different ways, some visible, some invisible (Schouten & Moriarty, 2003). Community in this study refers to a group of individuals having something in common; including problems, interest, reside or work in the same area or institution, who voluntarily decided to put their resources together in a same pool in order to solve their common and individual socio economic problems.
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2.2.5 Bank
Oxford Dictionary defines a bank as “an establishment for custody of money, which it pays out on customer‟s order (Oxford, 2008). A Bank can be defined as an establishment authorized by a government to accept deposits, pay interest, clear cheque, make loans, act as an intermediary in financial transactions, and provide other financial services to its customers
(Business dictionary, 2013). For the sake of this study a bank is a financial institution which deals with deposits and advances and related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it.
2.2.6 Community Banks
The term community banks refers to an independent, locally-owned that focus on providing traditional banking services in their local communities. They obtain most of their core deposits locally and make many of their loans to local businesses (FDIC, 2012). Usually community banks operate as independent institutions and do not affiliate with larger bank chains. They operate exclusively in and derive its funds from the community in which it is based. It is sometimes easier to obtain a loan from a community bank because it may have better knowledge of the local market
2.3 Theoretical Literature Review
2.3.1 The Bucket Theory of Financial Management
The bucket theory of financial management by Ann Henderson, (1990) cited in Kiweu (2017) states that becoming financially worry free is not an impossible goal through working systematically towards that goal. Imagine five buckets hanging in stair step fashion, each below and a little to the right of the one above it. As water flows into the top bucket the bucket begins to fill and the water flowing represents the resources of the family. When these
11 resources (water) reach their capacity, they flow into the second bucket which is another list of needs. This process continues until all the buckets are filled. The first bucket represents basic financial priorities such as food, clothes, shelter health care and transport. The second bucket represents financial security and includes saving plan and an emergency fund. The third bucket represents a family‟s insurance needs, including life, health, and property protection.
The fourth bucket represents quality of life. The fifth bucket represents investments. To build a sound financial base for a family, each bucket must be filled before resources are diverted to the next one so as to attain improved standards of living as a sign of economic development that contributes to poverty eradication.
First resources are used to provide basic needs. As income increases and money is left after basic needs are met, the extra is used to develop an emergency fund and begin a regular savings plan. When saving is regular and the emergency fund complete, the next step is to purchase adequate insurance to protect the family‟s health, income, and property. When adequate insurance coverage is provided, extra money is then diverted to building quality of life. Quality of life focuses on acquiring some of the wants, extras, and frills. The last step is to channel the extra money available into investments that will provide a secure future for the family. This might include money for children‟s education, retirement, or family goals. For the constant provision of the above resources, there is a need for constant investment with support from financial institutions like MFIs through provision of saving and credit services.
This is in line with the reasonable interest rate charges on the credit services as well as to the loan repayment periods for the financial services offered. In addition to that, there is a need for proper planning of the resources and income that have been attained from financial institutions so as to attain sustainable economic development. This theory assisted the researcher in identifying the services provided by VICOBA to its members in Arusha District.
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2.2.2 Effective Market Theory
Is the theory which was developed by Andrew-Lo (2005) for the aim of reconciling the economic theories based on efficient market hypothesis by applying the principles of evolution to financial interactions such as competition, adaptation and natural selection. He explained more that when multiple members from a single group are competing for scarce resources from a single market then the market is considered to be highly efficient. Also when a small number of individuals are competing for abundant resources then the market is considered to be less efficient (Andrew-Lo, 2005).
The theory enabled the researcher to understand the financial interaction between savings and credit organizations (i.e. VICOBA) and low income earners whereby low income earners depends on savings and credit cooperatives for their access to financial services especially loans, also the VICOBA depends on the demands of their financial services especially credit to borrowers from small and micro business enterprises for their survival and continuation of provision of service. However, the efficiency market of VICOBA can be a potential source of microfinance to low income earners, wherein, there is an existence of multiple number of small and micro business operators who are in need of microfinance services from VICOBA. This theory assisted the researcher in determining the outcomes of services undertaken by
VICOBA members in terms of food security, income and housing quality in Arusha District
2.3.3 Village Banking Model
Village banks are community-managed credit and savings associations established by NGOs to provide access to financial services, build community self-help groups, and help members accumulate savings (Holt, 1994). They have been in existence since the mid-1980s. They usually have 25 to 50 members who are low-income individuals seeking to improve their lives through self-employment activities. These members run the bank, elect their own officers,
13 establish their own by-laws, distribute loans to individuals and collect payments and services
(Grameen Bank, 2000). The loans are backed by moral collateral; the promise that the group stands behind each loan (Global Development Research Centre, 2005). Members have ability lends loan capital from the village bank. All members sign a loan agreement with the village bank to offer a collective guarantee. Members are usually requested to save twenty percent of the loan amount per cycle. Members‟ savings are tied to loan amounts and are used to finance new loans or collective income generating activities and so they stay within the village bank. No interest is paid on savings but members receive a share of profits from the village bank‟s re-lending activities. As according to Holt (1994), “the model anticipates that members‟ participation in village banks will enhance social status and livelihood of the members.
2.4 Empirical Literature Review
This part focuses to review various studies related to the impact of VICOBA in improving livelihood among low income earners
2.4.1 Services provided by VICOBA
In their study on microfinance and health services: experience and views of women in the
VICOBA grassroots bank system by Kessy et al (2017) reported that, Village Community
Banks (VICOBA) is a grassroots group-based microfinance model for the poor, especially women excluded from the formal sector. The study further indicated that; The model facilitates access to savings and credit services, providing members with the resources needed to improve their health and social welfare. The model also fosters clients‟ capacity to innovate and manage viable income-generating activities. Members meet weekly to contribute shares, collect loans or repay previous loans. The meetings support and motivate savings, social networking and sharing of valuable information related to business practices and social
14 welfare. After a year the group is dissolved, dividends are paid to members, and the cycle restarts
Lushakuzi, Killaga and Killagane (2017) postulated that VICOBA scheme emphasizes on capacity building of its members in order to improve performance of their activities. Normally, before the onset of the VICOBA business operations there are some services that are offered to the members including; Members attend capacity building training courses on basic savings
& credit skills; business Selection; Planning and Management (SPM); Proportional sharing of revenue generated from loan interests and other group activities encourages further investment among the individual members. The scheme can be operated at very low costs as it only involves purchases of credits kits, writing materials and member‟s contribution for training costs where applicable and can easily be replicated in other areas.
According to Mzee wa VICOBA (2010), the effectiveness of VICOBA scheme is due to its special features and operation principles, which emphasizes on: Self-help initiatives among the group members; Community capacity building and local resources mobilization;
Community ownership and shared leadership; High level of transparency and effective information sharing; Promotes voluntary accountability among the group members and
Enhances good governance. Therefore, from the range of services offered by VICOBA to its members, it is evident that the low income earners are lively to improve their livelihoods.
VICOBA has already proved to be one of the better tools for community emancipation socially and economically in Tanzania. This is evident in the people benefiting from the scheme.
According to SEDIT (2008) there are several challenges and limitations on the implementation of VICOBA in some parts of the country including; Cultural constraints where by in some places especially in rural areas, women who are potentially better performers are restricted from joining by their husbands on jealous grounds, educational level constraint where by in some communities members fail to grasp the advantages of the scheme just because of low
15 understanding capacity reinforced by wrong perceptions, infrastructure Constraint where by some communities are located in remote areas that cannot be easily accessed by facilitators and development agencies. Finally, lack of funds is another challenge facing VICOBA in
Tanzania.
Also Kitomari and Abwe (2016) in their study on failure and collapse of Village Community
Banks in Tanzania: Some Findings from Meru District in Arusha Region reported that, it is true that VICOBA have changed the lives of many people, the following factors are the basis of failure and collapse of case studies: group members‟ status of income poverty, late repayments and loan default, lack of business education and entrepreneurship skills both for group leadership and group members, wrong start by choosing or selecting wrong or uncommitted members, mistrust and mismanagement of funds, multiple group membership,
Loan repayment failures, which result in, members running away or migrating to other places. Muganda (2016) also argues that lack of entrepreneurship skills, lack of organizational management skills, low financial literacy and loan and financial assistance needs.
Lwanga-Ntale (2018) noted that despite the outlined challenges, VICOBA has proved an important instrument in promoting a savings and investment culture. The people-friendly banks are effective in mobilizing financial resources strategically by enabling members to engage in small-scale productive activities. This has particularly been true in communities where TASAF was operational, which implies that social protection interventions were mutually supportive in promoting savings and investments. The VICOBA model is also being used by a number of other institutions that focus attention on community development and natural resource management.
Kinisa (2019) further indicated that, apart from the challenges facing VICOBA, the overall performance of the VICOBA has been encouraging despite some of their inherent weaknesses. Nevertheless, in view of the important role of VICOBA in rural financial services 16 in the Tanzanian context, it may be worthwhile to consider replicating the VICOBA‟ experiences in the framework of future pipeline activities. The study revealed that;To this end, if VICOBA are to improve, continue and expand their role in rural financial services, they need to be supported through the provision of appropriate capacity building assistance, including training and members‟ education on savings and credit. This would enable them to upgrade their current level of management, resources, skills, accounting/financial knowledge, assets and overall operating procedures, which would in turn contribute to their sustainability, and make them more effective and efficient. This is the reason that VICOBA is operating in many areas as indicated in the map below.
Twamgabo (2016) on the study about the challenges facing women entrepreneurs using
Village Community Bank in Temeke Dar es Salaam revealed that self-saving techniques that have to be done in VICOBA project where small VICOBA can join and formulate a strong
VICOBA where community can make saving which the profit obtained will be used to improve their income generation activities and the study generalized that there is a need assisting
VICOBA group members to tackle the problem of inadequate entrepreneurship skills by conducting training sessions to VICOBA group leaders and group members in increasing their income generation and thereafter ineffective use of their resources.
2.4.2 Outcomes of activities undertaken by VICOBA
VICOBA is an emerging model that improves the welfare of women, children and households.
Women participating in VICOBA experienced improved finances and social benefits and gained social support networks, which are best described in increased savings and assets accumulation, access to health care, decision-making capabilities and support for their children‟s education (Kessy, 2017). A study on empowering people through community banks
(VICOBA) reported that the village bank is in the business of encouraging entrepreneurship and self-reliance among the members. It is financially self-reliant that all of its funds come 17 from their deposits that they save every week. The scheme is flexible in its implementation as can accommodate other social and economic activities of the target communities such as the promotion of local markets and production of goods, rehabilitation of health facilities, environmental 43 conservation initiatives, strengthening education facilities and timely acquisition of scarce or expensive productive inputs or equipment for poor communities
(USAID, 2014).
According to Lwanga-Ntale (2018) the Village Community Banks provide a number of services including soft loans, savings facilities and provision of training in management as well as social and economic development. For most VICOBA facilities, the first loan to a member is provided three months after the member has begun making savings deposits. The first loan has to be repaid within three months and the second within six months. The loan amount provided in the first instance is often equivalent to three times the member‟s savings. For example a member who has saved 50 000 shillings is eligible for a loan of 150 000 shillings.
After the first cycle, the bank leaders can offer any amount that a member may request if they are satisfied that the member has both the capacity and commitment to repay the loan. Other factors influencing the amount offered include the amount of money on account and the rate of repayment of previous loans. The study further indicated that, Access to microfinance services through VICOBA, transformations begin to happen in their lives, including improved astuteness in business and decision-making. They add that microfinance programmes have also contributed to positive changes in gender roles, and that female VICOBA members were better respected and valued because of their improved economic standing (P.37).
In his study on Katondo (2013) the impact of village community banks on households food security in Morogoro rural district revealed that VICOBA members were influenced to join the group because of the following determinants: the financial services, the sense of unity that bring them together solving social problems, the interest rates which pegged lower than other
18 financial institutions. The major financial services discovered are savings through buying community shares and deposits coming from contribution known as jamii, the provision of loans, training and yearly giving back annual profit, residual jamii and individual savings. The findings came up with the evidences that the majority of rural population adhered to set their
VICOBA credit use on agricultural activities, whether directly or indirectly involved, about 81.5
% responded that they were being involved in VICOBA activities in order for them to get resources for agricultural activities.
The findings were supported by Talvela and Mikkolainen (2019) in their study on evaluation of the agriculture, rural development and forest sector programmes in Africa country report:
Tanzania where they found that VICOBA activities have contributed significantly to households‟ improved livelihoods. One of the reasons is that the adopters dedicated only small patches of land to the method thus ensured food security in their families.
2.5 Research Gap
The role of VICOBA in serving low and middle income earners in Tanzania cannot be emphasized. VICOBA are organized as key players in combating poverty, as result its roles and functions draw attention of several researchers who then conducted studies on the contribution of VICOBA microfinance to poverty reduction in the country. Kihongo (2015).
Savings services are among the most beneficial financial services for low-income people. A number of Micro-Financial Institutions (MFIs) and Village Community Banks (VICOBA) have been working in Arusha District in providing financial services to support people‟s efforts to improve their livelihoods. All over the world, many studies have been conducted to assess the role of VICOBA in improving the livelihood of people. In Tanzania, the following studies have investigated about VICOBA including; Salum (2017), Kinisa (2019), Ngalemwa (2013),
Lushakuzi, Killagane and Killagane (2017), Haule (2015) and Chipindula and Mwanga, (2015).
Most of the surveyed literatures have mainly focused on the influence of VICOBA on
19 improving livelihood in general. This reveals a gap in the literature and shows the need for examining the impact of VICOBA in improving livelihood specifically to the low-income earners. Also, no study has been conducted assessing the impact of VICOBA in improving livelihood among low income earners in Arusha District, this also reveal a gape of space. This study therefore, sought to fill the gap by assessing the role of VICOBA in improving livelihood among low income earners in Arusha District.
2.6 Conceptual Framework
The conceptual framework is the narrative outline presentation of variables to be studied and hypothetical relationships between and among variables. In order to meet the objectives of the research and identify the variables for data collection, a conceptual framework has been developed. The independent variables include loans, Entrepreneurship Skills, Financial
Literacy and Insurance. The dependent variable is Livelihood of low-income earners.
Intervening Variable includes; Policy, lows, risks & uncertainty, exposure, weather and business intervention.
20
Figure 2.1: Conceptual Framework showing independent variables and dependent variable.
INDEPENDENT VARIABLES DEPENDENT VARIABLES
VICOBA SERVICES LIVELIHOD OF LOW-
Entrepreneur Skills INCOME EARNERS Education Experience Business improvement Management skills Better housing Trainings Food Security
Policy
Business practice/skills Law Risks and uncertainness Exposure Weather Business intervention
Food Security Clothing Children Education Better Housing
Source: Researcher proposition extracted from Literature
21
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter describes the research methodology which includes: research design, area of study, research approach, population, sample, sampling techniques, sample size, data collection methods, primary data, secondary data, data analysis technique, reliability and validity of the instruments and ethical considerations.
3.2 Research Design
Saunders et al (2007) defined a survey design as research design technique used by researchers to provide solution or answers to business, management and financial problems.
This study employed the survey research design. The design is useful in this study since it is used to explain the existence of two or more variables at a given point. Thus, in this study the survey research design was used to explain the relationship between VICOBA services and livelihood improvement among low income earners in Arusha District. Furthermore, the design was useful in this study as it helped to report things the way they are. In this regard, survey research design helped the researcher to achieve the main objective of the study which is to examine the results of VICOBA in improving livelihood among low income earners in Arusha
District.
3.3 Area of the Study
The study was conducted at Kimnyaki, Kisongo, Kiranyi, Mwandeti and Lemanyata Wards in
Arusha District, Arusha Region, Tanzania. Arusha District is one of the seven districts of the
Arusha Region of Tanzania. It is bordered to the North by Longido District, to the East by Meru
District, to the South by Kilimanjaro Region, to the West by Monduli District and it surrounds
Arusha City. Arusha District occupies an area of 1,547.6 square kilometers. As per 2012
22
Population and Housing Census the District recorded 323,198 people where 154,301 are males and 168,897 are females. (NBS: 2012). The choice of the District is due to the familiarity of the researcher to the study area and the fact that the selected Wards have mushrooming of VICOBA. Therefore, Arusha District has been purposively selected for the study because it provided information about the impact of VICOBA in improving livelihood among low income earners in Arusha District.
Figure 3.1: A map showing the location of Arusha District.
Source: Google Map, Map Data (2020)
3.4 Research Approach
A research method is the plan of circumstances for the gathering and analysis of data in a way that goals to combine the significance of the study purpose with economy in process (Mohd
2011). This study employed quantitative in the collection of relevant information concerning the objective of the study. Quantitative research is a means for testing objective theories by 23 examining relationships among variables which can be measured by instruments, so that numbered data can be analysed using specific statistical procedures. Therefore, this approach was useful as it requires little time in the data collection process as well as covers large groups in a short period and it enabled the researcher to collect numerical data from respondents. The collected data was quantitatively recorded.
3.5 Population
Population of the study refers to the population to which a researcher wants to generalize the results of the study. The population may involve a larger group of people, institution or things that has one or more characteristics in common on which a study focuses. It consists of all cases of individuals or elements that fit a certain specification (Debois (2018). In this study, the targeted population was the VICOBA members from the selected wards in Arusha District.
The total population of the VICOBA members from the selected wards is 240. The population from each ward is as follows; Kimnyaki 47, Kisongo 55, Kiranyi 59, Mwandeti, 41 and
Lemanyata 38.
3.6 Sample Size and Sampling Techniques
3.6.1 Sample size
For the purpose of this study, the sample size of 70 people is considered to be reasonable and affordable. A complete and update list of members of VICOBA form each ward was provided and used to select the most appropriate respondents for the study. Sample size was calculated by the following formula;
= 70
Where n = number of samples, N = total population=240; e = standard error of sampling (10%) is tolerated. By entering each value of the variable into the formula (1) above, obtained large
24 sample size of 100 respondents. The sample size is in line with argument of Hair et al (2006) who state that a research study designed to reveal factor structures should have more observations than variables, and that the minimum absolute sample size should be 50 observations.
Table 3.1 : Targeted Sample Size
Respondents Population Sample size
Kimnyaki 47 15
Kisongo 55 14
Kiranyi 59 12
Mwandeti 41 13
Lemanyata 38 16
Total 240 70
Source: Field Data, 2020
3.6.2 Sampling Technique
This study adopted adopt the stratified random sampling techniques. Stratified sampling is a probability sampling technique where the researcher divides the entire population into different subgroups or strata, then randomly selects the final subjects proportionally from the various strata. Two techniques that are used to allocate samples from strata: proportional allocation technique and equal allocation technique. Using the proportional allocation technique, the sample size of a stratum is made proportional to the number of elements present in the stratum. Using an equal allocation technique, the same numbers of participants are drawn from each stratum regardless of the number of elements in each stratum (Alvi, 2016). This study used the proportional allocation technique where the sample size of a stratum was
25 made proportional to the number of elements present in the stratum. The stratified sampling technique was used in this study because it guarantees that every VICOBA member from each selected Ward in Arusha District was represented in the study.
3.7 Data Collection Methods
In this study both primary and secondary sources of data was used. Primary and secondary data was collected; Data refers to the recorded factual material commonly accepted in the scientific community as necessary to validate research findings. Research data takes many different forms. Data may be intangible as in measured numerical values found in a spreadsheet or an object as in physical research materials such samples of rocks, plants, or insects (Albertson and Hillemann, 2019). Both primary and secondary data as was used to get enough information about the impact of VICOBA in improving livelihood among low income earners in Arusha District.
3.7.1 Primary Data
Primary data was collected by using questionnaires. Questionnaires was used to collect information from VICOBA members in Arusha District. According to Kothari (2004), questionnaires cover a large number and area compared to other methods like interviews. The information generated from questionnaires can be verified and cross-checked against the information collected using other data collection techniques. Questionnaires are generally less expensive and do not consume a lot of time in the administration. In this study, the questionnaire techniques enabled the researcher to reach all groups included in the study at the same time thus, the collection of data was easy and cheap. The closed-ended questionnaire was prepared and had five options for respondents to indicate their level of
26 agreement or disagreement as follows: 1= Strongly Disagree, 2= Disagree, 3= Neutral 4 =
Agree and 5 = Strongly Agree.
3.7.2 Secondary Data
Secondary data was gathered from various sources including both published and unpublished sources such as, journal articles (printed and electronic) research reports, dissertations, seminar and conference proceedings and books.
3.8 Data Analysis
Data analysis is the process of inspecting, rearranging, modifying and transforming data to extract useful information from it. Also, it is important to make sure that data analysis is done in a responsible for determining the patterns of the relationships among the variables relating to it (Chapman, 2018). Data was collected, coded and then entered in software (SPSS version
25) whereby frequency and percentage was used to analyse the demographic characteristics of respondents and descriptive statistics was used to analyse the two objectives of the study which are; to identify the services provided by VICOBA in Arusha District and to determine outcomes of activities undertaken by VICOBA members in terms of food security, income and housing quality in Arusha District. Pearson‟s Correlation was used to establish the relationship between VICOBA services and livelihood improvement among low income earners in Arusha District.
3.9 Validity and Reliability
3.9.1 Validity
According to Blerkom (2017), validity refers to whether or not the test measures what it claims to measure. The validity of the instruments for data collection was done through expert review
27 and pilot testing. Pilot study was done and any correction or adjustments was made accordingly in relation to the topic under study. The results of the pilot study was not included in the final research findings.
3.9.2 Reliability
Reliability is the degree to which a test is consistent and stable in measuring whatever it is measuring. Reliability requires the administration of the same test to the same respondents twice with a short time interval after the first test In this study reliability test was done using
Cronbach alpha. Only a reliability coefficient of 0.6 or 0.7 and above will be accepted. Findings of Cronbach‟s Alpha found to be 0.772 which above recommended value. This results are as shown in the table 3.2 below.
Table 3.2: Reliability Statistics
Reliability Statistics
Cronbach's Alpha No. of Items
.772 16
Source: Field Data 2020
3.10 Ethical Considerations
Ethical consideration in research is not only essential but also necessary to ensure that participants are treated with dignity and respect during the study. (Saunders, Lewis, and
Thornbill, 2017) argue that ethical issues are very important to be considered in the study such as voluntary participation, no harm to the participants, ensuring anonymity and confidentiality and avoiding deception. During this study, the following ethical issues were observed; the researcher sought data collection permit from the Ausha Institute of
Accountancy. The permission letter was sent to the Arusha Regional Administrative Secretary then the letter was sent to Arusha District Administrative Secretary who gave the researcher
28 permission to collect data in a specified period. After permission has been granted, the researcher collected data in the field. The researcher ensured that all respondents voluntarily participate in the study and the information collected was kept confidentially and was used for the study only. The no harm principle was highly considered.
29
CHAPTER FOUR
PRESENTATION AND DISCUSSION OF FINDINGS
4.1 Introduction
This chapter analyses, interprets and discusses data from the field. The findings obtained were based on the “The results of VICOBA in Improving Livelihood Among Low Income
Earners: A Case of Selected Wards in Arusha District.” The sections of this chapter are as follows: presentation of findings, correlation analysis and discussion of findings. The researcher distributed 70 questionnaires, but only 61 questionnaires were returned and used for analysis. Using tables and figures major results from the research were provided.
4.2 Presentation of Findings
4.3.1. Demographic Information
This section describes the general characteristics of the respondents such as gender, age, educational level, and years of service.
30
Table 4.1: Demographic Information
Demographic Characteristics Frequency Percent %)
Gender Female 33 54.1
Male 28 45.9
Age 18-24 Years 7 11.5
25-34 Years 32 52.5
35-44 Years 20 32.8
45 Years and above 2 3.3
Education Level None 1 1.6
Primary 10 16.4
Secondary 45 73.8
College 5 8.2
Marital Status Single 14 23.0
Married 33 54.1
Widowed 11 18.0
Divorced 3 4.9
Source: Field Data 2020
i. Gender
Table 4.1 presents the gender of respondents. It shows that of the 61 respondents who participated in the study, 33 respondents equivalent to 54.1% were female and 28 equivalent to 45.9% were male. These results are not accidental but factual in that generally there are more females‟ members than males in Village Community Banks.
ii. Age
31
From Table 4.1 above, the findings indicate that the majority of the respondents were between the age of 25 to 34 years (52.5%) followed by the age group of between 35 and 44 years
(32.8%). This implies that majority of members of VICOBA were youths and middle aged rather than the other age groups.
iii. Education Level
To a large extent the education level can affect attitude of a person and the way of understanding any particular social phenomena. According to Fry, (2017 person will react to a specific scenario depending on his level of education. By understanding that, researcher becomes interested in evaluating respondents' education level. Findings that 73.8% of the respondents had secondary education level, whereas, (16.4%) had primary education level while (1.6%) had no education and (8.2%) had college education. The idea behind education level in this study was to inquire different ideas from different level of education in order to get different information regarding the results of VICOBA in improving livelihood among low income earners.
iv. Marital Status
The results from table 4.6 further denotes that (23.0%) were single also (54.1%) were married,
(18.0%) were widowed and (4.9%) were divorced. This implies that majority of the members of
VICOBA are married ones.
4.3.2 Services provided by members of VICOBA
The objective was to identify the services provided by VICOBA to its members in Arusha
District. The respondents were provided with statements and were required to rate the level of agreement. The key ranged from 1 to 5, where 1 represent strongly disagree, 2 = disagree, 3
32
= Neutral, 4 = Agree and 5 = Strongly Agree. Table 4.4 shows the findings with regard to the services provided by VICOBA to its members in Arusha District.
Table 4.2: Services provided by members of VICOBA
Statements SD D N A SA
Financial Loans F 0 3 0 24 34
(%) 0 4.9 0 39.3 55.6
Entrepreneurship skills F 3 24 5 28 1
(%) 4.9 39.3 8.2 45.9 1.6
Financial Literacy F 0 1 23 4 2
(%) 0 1.6 37.0 6.6 54.1
Business Capitals F 28 9 0 24 0
(%) 45.9 14.8 0 39.3 0
Business assets F 0 3 25 19 14
(%) 0 4.9 41 31.1 23
Business Management Skills F 0 1 24 31 5
(%) 0 1.6 39.3 50.8 8.2
Key: SD=strongly disagree D= Disagree N=Neutral A=Agree SA=strongly agree
Source: Field Data 2020
The study found that out of 61 respondents, 58 of them which are equivalent to 95.1% agreed that VICOBA provide financial loans to them while only 4.9 disagreed. Majority of the respondents (47.5%) affirmed that VICOBA provide entrepreneur skills to them, 44.2% disagreed to this statement and 8.2% of the respondents were not sure. The results reveals that majority of respondent (60.7%) agreed that VICOBA provide financial literacy to them,
37.0% were not sure and only 1.6% agreed. As per analysis, 60.7% of the respondents disagreed that VICOBA provide Insurance. 39.3% of the respondents asserted that VICOBA
33 provide insurance to them. Majority of the respondents (54.1%) agreed that VICOBA provide raw materials to them. 41% were not sure and 4.9% disagreed. Results unveiled that VICOBA provide business capitals to them. The findings revealed that VICOBA provide business assets to them. This was shown by 62.3% of the respondents who agreed to this statement.
Also, majority of the respondents agreed that VICOBA provide business management skills to them. From the findings above, it implies that VICOBA services provided to members meant to give them self-development in term of social and business aspect.
4.3.3 Outcomes of services undertaken by VICOBA
The study sought determine outcomes of services undertaken by VICOBA members in terms of food security, income and housing quality in Arusha District. Statements were provided to respondents and they were asked to say whether they strongly disagree to them, disagree to them, they are neutral about those statement, they agree with them or they strongly agree to those statement. The results were as shown in Table 4.3 below.
34
Table 4.3: Outcomes of services undertaken by VICOBA
Statement SD D N A SA
Business Improvement F 5 2 26 28 5
(%) 8.2 3.3 42.6 45.9 8.2
Better housing F 1 7 15 37 1
(%) 1.6 11.5 24.6 60.7 1.6
Food Security F 0 9 28 24 0
(%) 0 14.8 45.9 39.3 0
Income raise F 5 11 20 25 0
(%) 8.2 18 32.8 41 0
Improve Children Education F 0 23 5 32 1
(%) 0 37.7 8.2 52.2 1.6
Raise of business profile F 1 26 0 3 31
(%) 1.6 42.6 0 4.9 50.8
Business enlargement F 0 0 28 24 9
(%) 0 0 45.9 39.3 14.8
Incremental sales F 0 3 25 19 14
(%) 0 4.9 41 31.1 23
Key: SD=strongly disagree D= Disagree N=Neutral A=Agree SA=strongly agree
Source: Field Data 2020
The study found that 54.1% of the respondents agreed that VICOBA services lead into business improvement, 42.6% were not sure and 11.5% disagreed to this statement. The finding shows that majority of respondents 62.3% agreed that VICOBA services lead into better housing, 24.6% were not sure of this statement and 13.1% of the respondents disagreed to this statement. 39.3% of the entire population indicated that VICOBA services
35 lead in food security and 45.9% were not sure while 14.8% disagreed to this statement. The study findings reveal that 41% of the respondents stated that VICOBA services lead into income raises while 32.8% were neutral, 18% disagreed and only 8.2% strongly disagreed.
53.8% agreed that VICOBA services lead improve children education of the members 37.7% disagreed while 8.2% were neutral. Moreover, study findings unveiled that VICOBA services raise business profile by 55.7% of the entire population. 42.6% disagreed to this statement and 1.6% strongly disagreed. Majority of the respondents agreed that VICOBA services lead into business enlargement and sales incremental. This was shown by 54.1% and 54.1% respectively
4.3.4 Situation of the members Before and After joining VICOBA
The table below show the situation of members Before and After joining VICOBA.
Table 4.3 Situation of the members Before and After joining VICOBA
Before joining VICOBA After joining VICOBA Performance Indicator HIGH LOW HIGH LOW
Business Improvement
Increase profits
Better housing
Food Security
Increase market share
Income raise
Source: Field Data 2020
36
Findings above showed that majority of the respondents indicated that their living situation were low before joining VICOBA. Hence their situations were improved after joining VICOBA.
The above factors were direct observed by the researcher when he was collecting data.
4.5 Relationship between VICOBA services and livelihood improvement
Study findings sought if there is any relationship between VICOBA services and livelihood improvement. Data in table below depict positive relationship between VICOBA services and livelihood improvement (r =0.517, N=63). This implies that VICOBA services has positive relationship on the livelihood improvement of the members. Livelihood of the member will improve as they utilize VICOBA servicesThis is evident in the presentation below;
Table 4.4 Relationship between VICOBA services and livelihood improvement
Correlations VICOBA Livelihood services improvem ent VICOBA Pearson Correlation 1 .517 services Sig. (2-tailed) .000 N 63 63 Livelihood Pearson Correlation .517 1 improveme Sig. (2-tailed) .000 nt N 63 63 Source: Field Data 2020
4.6. Discussion of Findings
VICOBA program offers beneficial services for low income people and the capacity of managing scarce household and entrepreneur resources more efficiently, protection against risks, provision for the future and taking advantage of investment opportunities, for economic returns. Findings of this study revealed that VICOBA provide financial loans to its members.
This finding is in line with Bire (2017) who found that members of VICOBA stand to benefit more as compared to accessing loans from formal financial institution which charge high interest rate. the interest to the loans, are set at lower rate, improving the capacity of the
37 members to remain in the groups, and enable them to retain portion of earned incomes good enough to improve not only their life circumstances, but also savings and investments.
Village Community Banks have been reported to benefit the poorer men and women in developing countries since their establishment. In Tanzania, VICOBA and other informal financial institutions have reached 27.9% of rural communities who were initially unsaved.
Much as the grassroots communities have been served by VICOBA (Kaise, 2017). Study findings depicted that VICOBA provide entrepreneur skills and financial literacy to its members. The role of VICOBA in serving low and middle income earners in Tanzania cannot be emphasized. VICOBA are organized as key players in combating poverty, as result its roles and functions draw attention of several researchers who then conducted studies on the contribution of VICOBA microfinance to poverty reduction in the country (Kihongo 2015)
Through VICOBA, the group members are expected to save and share the financial and technical resources. They jointly save their money so that in the future they get soft loans from them by paying small interest rate which is taken as income to their group (Abdul 2016).
Hence they solve their problems and change their social well-being. Results of this study revealed that VICOBA provide Insurance, raw materials, business capitals and business to assets to its members. The VICOBA scheme provision of the business capitals and business to assets is very important as it does enable members to access resources which facilitate them in carry their businesses hence generate income for their living.
VICOBA is a grassroots based lending model, which focuses on fostering participant‟s ability to innovate and manage viable income generating activities. Through VICOBA, low income earners are enable to overcome those challenges which are facing and hinder them to
38 become entrepreneur or doing their entrepreneur activities, business by getting loans and increase their incomes. The study found that VICOBA lead into business improvement, better housing and food security to its members. These findings correspond with Keshia (2016) who argued that main aims of VICOBA is to unite the rural people and enable them save and share financial and technical resources to improve the social and economic status of the members.
Ledgerwood (2013) indicated that provision of micro financial services to the active poor people has been recognized to be a means of changing their status through improving access to financial services.The study findings of this study revealed that VICOBA services lead into income raises, improvement of children education, raise business profile as well as business enlargement and sales incremental. These findings comply with findings of (Morns 2016;
Butterworth 2016; Hamboll 2018 Lazaro 2016; Marsland 2017 and Mganga 2018). that
VICOBA help its members to enlarge their businesses size and profile hence become financially self-sufficient. Also, these findings correlate with finding of Allen (2019) that VICO help its members to increase their income, to diversify their activities which decrease the vulnerability, to smooth consumption and afford basic things, pay school fees, manage risk and work as a security in case of emergencies. It worthy considered that VICOBA satisfies basic needs and protection by helping individuals and households to meet basic needs and protection against risks, hence improves economic welfare of the community and enterprise stability of low income households.
39
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction
This chapter presents the summary conclusions and recommendations of the study on the results of VICOBA in Improving Livelihood Among Low Income Earners: A Case of Selected
Wards in Arusha District. Section one of the chapter provides a summary of the major findings of the study, Section two presents the conclusions and section three provide policy implication followed by Critical Evaluation of the Study. Lastly, recommendations of the study as well as the agenda for further study.
5.2 Summary of Findings
i. Services provided by VICOBA to its members in Arusha District
The study found that VICOBA provide financial loans to them. Majority of the respondents affirmed that VICOBA provide entrepreneur skills to them. The results reveals that majority of respondent agreed that VICOBA provide financial literacy to them. Majority of the respondents disagreed that VICOBA provide Insurance. Majority of the respondents agreed that VICOBA provide raw materials to them. Results unveiled that VICOBA provide business capitals to them. The findings revealed that VICOBA provide business to assets.
ii. Outcomes of services undertaken by VICOBA members
The study found that, majority of the respondents agreed that VICOBA lead into business improvement. The finding shows that majority of respondents agreed that VICOBA services lead into better housing. Majority of the entire population indicated that VICOBA services lead in food security. The study findings reveal that majority of the respondents stated that VICOBA services lead into income raises. Majority agreed that VICOBA services lead improve children
40 education of the members. Moreover, study findings unveiled that VICOBA services raise business profile. Majority of the respondents agreed that VICOBA services lead into business enlargement and sales incremental.
iii. Relationship between VICOBA services and livelihood improvement
Study findings sought if there is any relationship between VICOBA services and livelihood improvement. Findings depicted a positive relationship between VICOBA services and livelihood improvement.
5.3 Conclusion
From the findings presented in the previous chapter, the study concluded that VICOBA play a great role towards Improving Livelihood Among Low Income Earners in Arusha District.
VICOBA l being one of the micro lending, has ensured that its member benefit from financial loans, entrepreneur skills, financial literacy and business capitals. Also the study concluded that, outcome of the VICOBA services to its services are business improvement, better housing, food security, income raises, improve children education of the members, raise business profile as well as business enlargement and sales incremental.
5.4 Critical Evaluation of the Study
Despite the challenges of undertaking this report, it has been successfully and timely completed. The research outcome was able to reveal that VICOBA services has positive impact on the improvement of livelihood of low income earners. I would concentrate on the qualitatively research approach to the results of VICOBA in Improving economic development of women if I had to do the same task.
5.5 Policy Implication and Recommendations
Basing on the findings of this study the following are recommended;
41
i. Government should ensure that the education is provided to the members so as to
enable the members to perform their VICOBA members to perform their activities well
and in a more efficient way, and this will attract more members to join in the VICOBA.
ii. Also there should laws and regulation to the leaders of VICOBA group who fraud the
funds accumulated by the members. This laws will help to maintain the transparent
and accountability among the leaders.
iii. Leadership skills; also the stakeholders concerning with VICOBA they should provide
leadership skills to the VICOBA leaders so that they can manage well the members
and funds accumulated by the members.
iv. There is need for VICOBA methodology or its mode of operation to be reviewed again
in order to integrate some paramount and contextual phenomenon that are specific
like rural communities.
v. District authorities should assign the responsibilities to the cooperatives, microfinance
and community development officers to technically assist the VICOBA group
members to properly manage their income generating activities, legal registration of
their groups, networks and properties so as to have a legal status that may later stand
as collateral in the process of securing credit facilities to formal financial institutions.
vi. The government should support all VICOBA implementing agencies to establish an
umbrella at national level that will work as their networking platform for the purpose of
increasing geographical coverage while protecting the authenticity of this unique
development model of women.
5.6 Areas for Future Research
Researcher recommends the followings for future researches:
i. The study only covered the parts of Arusha District, therefore, it is suggested that
future studies should cover other areas with different geographical conditions to 42
compare results and see if VICOBA can contribute to the improvement livelihood
among low income earners. ii. Similar studies should be conducted, but this time the focus should be on the
economic development of women. iii. On methodology, the research approach selected for achieving the study goals was
restricted to quantitative approach. As such, future research could build on this study
by looking qualitatively and quantitatively approaches at results of VICOBA in
improving livelihood among low income earners. Future studies could use the same
survey tool and technique to generalize research more globally. iv. Finally, only a single data collection instrument was employed and future research
through interviews could be undertaken to triangulate.
43
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APPENDICES
APPENDIX I: DATA COLLECTION LETTER
Dear respond, you have been selected to participate in a study entitled “The Role of VICOBA in improving livelihood among low income earners in Arusha District.” This study is conducted by Mr. Joseph Massawe from the Institute of Accountancy Arusha. Please provide true information to enable the accomplishment of this study. Responses you provide are for academic purposes only and will be treated with utmost confidentiality. Do not write your name in this questionnaire. Thank you!
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APPENDIX II: QUESTIONNAIRE
PART ONE: DEMOGRAFIC INFORMATION (tick the appropriate answer)
Gender Male Female
Age 18-24 Years 25-34 Years 35-44 Years 45 Years and above
Highest Level of Education Primary Education Secondary Certificate Diploma Bachelor Degree Masters
Business Operation Below 2 years 2- 5 years 6-10 years Above 10 years
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PART TWO: SPECIFIC QUESTIONS
Please read carefully and tick correct option
1=strongly disagree 2= Disagree 3=Neutral 4=Agree 5=strongly agree
SERVICES PROVIDED BY VICOBA TO ITS MEMBERS 1 2 3 4 5
1 Financial Loans
2 Entrepreneurship skills
3 Financial Literacy
4 Insurance
5 Raw materials
6 Business Capitals
7 Business assets
OUTCOMES OF SERVICES UNDERTAKEN BY VICOBA MEMBERS
1 Business Improvement
2 Better housing
3 Food Security
4 Clothing
5 Children Education
6 Raise of business profile
7 Business enlargement
8 Incremental sales
THANK YOU VERY MUCH FOR YOUR PARTICIPATION
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KIAMBATISHO I: BARUA YA UKUSANYAJI WA DATA
Mpendwa mhojiwa, umechaguliwa kushiriki katika utafiti ulioitwa "Matokeo ya VICOBA katika kuboresha maisha kati ya watu wenye kipato cha chini katika Wilaya ya Arusha." Utafiti huu unafanywa na Bwana Joseph Massawe kutoka Taasisi ya Uhasibu Arusha. Tafadhali toa habari ya kweli kuwezesha kufanikisha utafiti huu. Majibu unayotoa ni kwa madhumuni ya kitaaluma tu na yatashughulikiwa kwa usiri mkubwa. Usiandike jina lako kwenye dodoso hili.
Asante!
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SEHEMU YA KWANZA: TAARIFA BINAFSI ZA MHUSIKA.
Gender Jinsia Mwanaume
Mwanamke
Miaka Miaka chini ya 18
Miaka 18-24
Miaka 25-34
Miaka 35-44
Miaka zaidi ya 45
Kiwango cha juu cha elimu Hakuna
Cheti
Stashahada
Shahada
Uzamili
Biashara chini ya miaka2
Miaka 2-5
Miaka 6-10
Zaidi Ya miaka 10
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SEHEMU YA PILI: MASWALI YA UTAFITI WA MASOMO (Tiki jibu linalofaa)
1 = sikubaliani kabisa 2 = Sikubali 3 = Si upande wowote 4 = Kubali 5 = nakubali sana
Huduma zitolewzo na VIKOBA kwa Wanachama 1 2 3 4 5
1 Mikopo ya kifedha
2 Ujuzi wa ujasiriamali
3 Elimu ya fedha
4 Bima
5 Malighafi
6 Mitaji ya biashara
7 Mafi za biashara
Matokeo ya huduma za VIKOBA kwa Wanachama
1 Uboreshaji wa Biashara
2 Nyumba bora
3 Usalama wa Chakula
4 Mavazi
5 Elimu kwa watoto
6 Kukuza biashara
7 Upanuzi wa biashara
8 Mauzo ya nyongeza
AHSANTE SANA KWA KUSHIRIKI
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