Promoting Rural Entrepreneurship in Tanzania Through Empowering Voluntary Financial Saving Groups

Abstract

Purpose: This study investigated the promotion of rural entrepreneurship in Tanzania through empowering Voluntary Financial Saving Groups (VFSGs). Specifically, the study examined practices adopted by VFSGs and challenges confronting such VFSGs. Design/Methodology/Approach: A cross-sectional study using qualitative and quantitative approaches was carried out using a sample of 262 members of VFSGs that was selected using proportionate stratified sampling from different strata. The study was conducted in the Iringa region, whereas the Iringa and Kilolo districts were purposefully selected. Questionnaires, in-depth interviews, and focus group discussions were employed as data collection methods. Qualitative data analysis was carried out using content analysis. Descriptive statistics were adopted for quantitative data analysis, whereas mean scores were performed, followed by ranking. Research Limitation: This study was limited to one geographical region, Iringa, with only two districts, Iringa and Kilolo. The limitation was attributed to limited time and financial resources to cover a wider scope. Findings: Major findings of the study regarding practices adopted by VFSGs included inadequate training on enterprise development and management for members of VFSGs and inadequate seriousness to punish loan defaulters. Further, major findings about challenges facing VFSGs were the small amount of loans provided to members, inadequate business training to members, late loan repayment, the high dropout rate of members, unfavourable entrepreneurial cultures among members, conflict emerging among members and poor attendance in a meeting among members of VFSGs. Practical implications: The study concludes that skills gaps and loan defaulters in VFSGs are practices that are less adopted. This calls for intervention through entrepreneurship and business training and further longitudinal studies to establish behavioural change over time after intervention. Social Implication: Policies should mandate the provision of business training to VFSGs before they receive loans from money lenders. They should also focus on reducing mobile money transactional charges to fuel technology usage among VFSGs. Originality: The empirical data gathered from various regions in rural Tanzania adds valuable, real-world evidence to the discourse on VFSGs and rural entrepreneurship. This data-driven approach strengthens the credibility and relevance of the study's conclusions and recommendations.