Self-Help Groups and Poverty Reduction among Rural Women in Tanzania: A Case of VICOBA

Abstract

This paper focuses on the effectiveness of the Village Community Banks (VICOBA) as a self-help group (SHG) model in reducing poverty among rural women in Tanzania. Given its widespread presence in both urban and rural areas, the study aims to understand VICOBA's operation and its impact on rural women. The research is based on primary data collected through face-to-face interviews with 60 rural women in the Mbozi District, divided equally between members and non-members of SHGs.The study used mixed methods of both qualitative and quantitative methods; the study found that while SHGs positively affect participants' income and asset ownership, the changes are gradual and often insufficient to lift them above the poverty line. Key challenges include a lack of external financing and business training, delayed loan repayments, small loan amounts, insecure cash handling, and distrust among leaders. Non-members cited distrust and inability to afford mandatory weekly shares as reasons for not joining. The paper recommends formalizing VICOBA to enhance its effectiveness, thereby securing financial benefits for members and attracting donor support, especially in rural areas where poverty is prevalent. Collaboration between formal financial institutions, NGOs, and SHGs could improve access to better loans and income-generating activities. Building community trust is crucial for fighting poverty locally and nationally