The Case of Village Community Banks
(VICOBA)
By Mr. Filbert Sambagi
(SEDIT EXECUTIVE DIRECTOR)
seditvicoba@yahoo.com- www.seditvicoba.or.tz
+255 754 618809
Tanzania is among the developing countries in the world, however, the
government and its people are struggling to reduce poverty and
improve their economy.
The Tanzania economy is characterized by a small segment of large
firms made up of subsidiaries, franchisees and a few state owned
companies and very large segment of micro-enterprises dominated by
very small enterprises most of which are informal.
An insignificant small and medium sized enterprises segment separates
the two segments.
Therefore sustainable scaling up of best practices should focus
MSMEs most of which are informal for the sake of filling the so called
“the missing middle”.
It is estimated that about a third of the GDP in Tanzania originates from
the Small and Medium Enterprise (SME1) sector.
A large majority of these (98%) are micro enterprises/informal
(employing less than 5 people). SME sector plays a crucial role in the
economy.
Since SMEs tend to be labor-intensive, they create employment at
relatively low levels of investment per job created..
SMEs play a fundamental role in utilizing and adding value to local
resources
Through business linkages, partnerships and subcontracting relationships,
SMEs have great potential to complement large industries requirements
through symbiotic relationship.
Enabling
Environment
Catalysts
Actors
•Facilitating
• Central & Local
•General Policy Institutions –BDS Government
Framework
•Facilitating Inst. •Private Sector
– Finance
•Regulatory
•NGOs
Framework
•Technical and
•Infrastructure Managerial skills •Development
Partners
•Business Culture
Instruments
• Macro
(Policies)
•Meso
(Capacity
building)
•Micro
(Facilitation)
Access Strand – Definitions by Finscope 2009
FORMALLY INCLUDED
Includes people hold an account with a financial institution such as a commercial
bank, community bank or insurance company that is supervised by a financial
services regulator and pension funds
SEMI-FORMAL
Includes users of products offered by formally registered institutions but not
supervised by a financial service regulator eg. SACCOs, MFIs, Mpesa etc..
INFORMAL
Includes people who use products offered by informal associations or groups.
E.g.. ROSCAs, Village Community Banks (VICOBAs), Village Savings and Loans
Associations (VSLAs), other community based savings groups, family and
friends, small businesses and money lenders.
TOTALLY UN-SERVED:
Includes people who have no dealings with, and are excluded from any of the
segments above.
Financial access Strand 2009 - 2006
Informally included strand
Reasons for not having savings and investment products
SEDIT
Is a non-governmental, non-political, non-religious organization
which has been established with the mandate of bringing social
and economic development for the majority poor Tanzanians in
rural and urban areas.
VICOBA (Village Community Banks)
The Village Community Banks (VICOBA) is a development
model , that employees holistic approach. It is the replication
of MMD (Mata Masu Dubara) model. MMD which means
Women on the Move towards development was promoted by
Care International in Niger in 1991 being an adoption of African
traditional self help practices.
VICOBA model operates through self selected groups of people of 2530 members who are essentially in smaller groups of fives called
collateral groups (these acts like pressure groups in loans payments
and guarantee systems).
Once it is formed, members elect the group management committee
leaders among themselves; and there after the whole group undergoes
training on business management, entrepreneurship and group
management
For around 16 weeks, the group attends banking and training. The
banking operation starts by pre determining a group share value, of
which can Tsh.1000, 2000, 5000 etc, depending on the economic status
of the group members. Each member has to buy between 1-3 shares
per week plus other pre determined health, education and group
operations funds contributions. Thereafter, group is linked to formal
financial service provider-commercial bank.
SEDIT has a developed a special package for training VICOBAs with
well-defined curriculum. Training is a sustain inability pillar that forms the
major strength of VICOBA model
Objective:
To sensitize the local authorities and the community acquaint them
with the basic characteristics of the VICOBA methodology and
recruit them into the program and form groups.
Objective:
To enable group members understand clearly how to manage their
group activities and provide business management skills to enable
them select, plan and manage their IGAs profitably.
Objective: Assist the group to become self-governing
The group members at this phase are taking loans and reimbursing
accordingly. It is a high time as well for other integrative training like
appropriate skills, governance, agribusiness etc
Objective: Assist the group to become independent from the
project
The Field Agents visits the groups at the end of three months. At that
time, they will do a final evaluation of the group. Based on this
evaluation, decision is done on whether the group is ready to be
independent, or if it still needs assistance. Based on the evaluation
results the Field Agent can estimate appropriate time, and
determine type of and magnitude additional assistance to the weak
groups.
PROGRAM
REGION
MWANZA
MUSOMA
SINGIDA
MANYARA
TANGA
ORGUTARUSHA
SEDIT
VICOBA
PROGRAM
ME (FSDT) MOROGORO
LINDI
RUMAKI
VICOBA
PROGRAM
(WWF TZ.)
COASTAL
(SEDIT)
DAR
UNDP
VICOBA
PROG.
TOTAL
MTWARA
RUVUMA
12
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
30
District
UKEREWE
BUNDA
SERENGETI
MUSOMA
TARIME
SINGIDA
HANANG
BABATI
SIMANJIRO
KITETO
MBULU
KILINDI
HANDENI
KOROGWE
MUHEZA
KARATU
MONDULI
MOROGORO
KILOSA
KILOMBERO
KILWA
RUFIJI
MAFIA
MKURANGA
ILALA MUNICIP.
NANYUMBU,
MTWARA
NEWALA
MASASI
MBINGA
Number of
Groups
108
93
78
103
116
103
101
124
99
80
107
94
115
90
110
105
86
84
99
109
50
25
90
20
80
22
38
26
27
60
2442
MEN
1572
1159
860
1154
1112
1169
1000
1138
795
734
1494
1247
1280
1233
1493
960
666
857
1088
1420
832
380
1321
335
357
420
580
311
209
862
28038
Members
WOMEN
1602
1347
1114
1668
1677
1595
1586
2444
2026
1475
1522
1339
2158
1270
1586
1848
1577
1424
1638
1675
576
321
1109
215
1807
196
484
391
491
858
39019
Total
3174
2506
1974
2822
2789
2764
2586
3582
2821
2209
3016
2586
3438
2503
3079
2808
2243
2281
2726
3095
1408
701
2430
550
2164
616
1064
702
700
1720
Capital mobilized
by 2011 ( Tsh.)
1,089,078,160
611,550,415
466,042,609
795,087,664
673,497,290
734,293,051
640,001,151
1,121,993,666
1,056,356,949
539,313,487
665,717,851
427,494,581
895,320,267
401,420,650
764,086,960
675,509,717
414,939,003
522,388,724
516,271,174
584,906,621
335,263,363
167,631,682
603,474,053
134,105,345
536,421,381
147,515,880
254,800,156
174,336,949
181,042,216
402,316,036
67057 16,532,177,050
For about 8 years SEDIT has conducted different VICOBA projects with the
support from partners like FSDT for 20 districts, WWF 5, SONGAS 2 districts,
UNDP/Ministry of Finance – Poverty eradication Department 6 districts.
Over 4000 VICOBA groups with 120000 members, with loan fund of over
Tzs.80Bil. from rural areas, 60 % being women. Also there are about 500
paraprofessionals trained by SEDIT as VICOBA FTs
Over 50 institutions have been capacitated to run VICOBA projects
including local government institutions and NGOs
Linkages of VICOBA groups to other service providers particularly
agribusiness, health, simple technologies, education and good
governance has been successful and between groups.
Huge demand against resources
 Training more groups
Capacity building networks
 Reaching new areas, sensitization and formation of new groups.
Standards and quality management
Political interference in the VICOBA groups and the model
Missing recognition for linkage with forma sector due to Informality
Absence of institutions for linkage to provide services like simple
technologies
Timely information flow and gathering of data.