Impact assessment of microcredit institutions on poverty reduction in Tanzania: a case of village community banks in Songea municipal and rural district

This study intended to investigate the impact of microcredit programs on poverty reduction in Tanzania. The objective of this study was to show how microcredit works, by using VICOBA lending methodology for reducing poverty and how it affects the living standard (income, saving, expenditure etc.). The main goal of this study was not only to find out the mechanism of microcredit programs, but also to find out that how this mechanism helps poor people to improve their living standards. By doing so, the researcher believe that it would give an upper hand, especially when it comes to finding answers to the questions raised in the problem statement. The sample was chosen based on the non-random sampling technique, from two districts in Ruvuma region and we interviewed the people who are already involved in microcredit activities. In this study, qualitative and quantitative approaches were all employed during the data analysis. Statistical Package for the Social Sciences (SPSS) was used as a tool to analyze data which was collected. The package was used to determine frequencies in order to analyze the number of respondents belonging to each variable. Hypothesis of the study was tested by using linear regression. From the analysis of data, findings conclude that microcredt institutions like VICOBA cannot lift the poor out of poverty. This is because the poorer of poor face underdevelopment syndrome - This combination of factors make an individual/ community stagnate or progress at a very slow pace. However the models act as a buffer to protect these poor not to fall under the established poverty line. A cross disciplinary and intergrated approach is recommended to solve the dynamics of poverty.