In Summary

Village community banks, popularly known as vicoba, use the Grameen bank model to try and bring some financial inclusion in rural areas.

The theft of Sh48 million belonging to members of Migombani Vicoba in Segerea, Dar es Salaam, has understandably come as a big blow to them.

Village community banks, popularly known as vicoba, use the Grameen bank model to try and bring some financial inclusion in rural areas.

The self-help micro-finance schemes, however, are no longer limited to people in rural areas, and have become a countrywide phenomenon. Currently, vicoba can be found at workplaces, in neighbourhoods, among members of houses of worship and even among friends.

Vicoba are a response to the need to deepen financial inclusion and people’s urge to gain financial freedom.

People join vicoba for various reasons, including raising school fees, rent and money for development projects such as building houses, buying land, boosting existing businesses or starting new ones and obtaining lump sums for social obligations like weddings.

People have come to realise that they cannot depend on salaries or incomes from their businesses alone. They need ways of saving and obtaining lump sums that enable them to manage their financial obligations.

Therefore, when money saved over several years gets stolen or lost in any way, it is a huge blow to members. Their hopes are dashed.

This is particularly more painful because of a lack of a legal framework within which vicoba operate. It becomes difficult for legal action to be taken against those who default or somehow sabotage groups’ initiatives.

The Segerea incident, which is neither the first nor the last, should serve as a wake-up call to policy-makers. It is time proper laws and regulations were put in place to safeguard the running of vicoba.

Innovators also have an opportunity to come up with innovative products that will help make transactions carried out by vicoba members safer and more convenient. One way to secure the money is for groups to hold their savings in banks and use digital means to collect and disburse the cash. It can be done.