This study assessed the effect of VICOBA services on the performance of small and medium enterprises in Tanzania. The study employed descriptive design to establish relationship between loans and financial performance of Small and Medium Enterprises (SMEs) in the Kinondoni district. The multistage sampling techniques of simple random and judgmental sampling were employed in selecting 76 replicates from Umoja wa VICOBA Kata ya Kigogo (UVIKAKI). Structured questionnaires instruments and interviews were used in data collection. Data analysis was performed using descriptive and content analysis. The study findings revealed that, there is significant influence of VICOBA to the development of entrepreneurship schemes and poverty reductions among community members of UVIKAKI scheme. Through loans disbursement at low interests encourage the improvement of capital and livelihood to the members through income-generated activities such as poultry, catering, canteen, and workshops. The government partners that play a key role in the grassroots movement of informal sector of economy should call on all funders, financing organizations, and development partners to help the marginalized population. Similar to this, communities could assess themselves against programs like VICOBA by developing their own internal awareness, knowledge, skills, and capital.
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