An Evaluation of the Influence of Village Banking on Livelihoods: A Case of Mpingu Extension Planning Area in Lilongwe District, Malawi

The study assessed the influence of loans that are acquired through village banking participation in rural communities whose main objective was to evaluate the effect of village banking on livelihood in Mpingu Extension Planning Area in Lilongwe Malawi. The sample size in the study was seventy-five (75) village bank and non-village bank participants. A village bank is a type of banking that does not involve any formal institutions for people to access the services, unlike the well-known traditional banks that require a rigorous process for one to acquire the services. The research design was exploratory sequential mixed methods and purposive sampling was used to identify the participants. The research followed descriptive research which is a type of research that describes the specific characteristics of a certain population. The tools used in data search was a questionnaire and focus group interviews. The study used both descriptive and inferential methods in data analysis. The study concluded that despite members who save through village savings and loans having the potential to increase their likelihood of improving their life outcomes there are still failing to meet the outcomes. The factors such as high default rate, climate change, market failure, and COVID19 limited their enterprises which led to high default rates. Findings suggest that obtaining loans from village banks is interest-based, which means that if groups have high-interest charges, they may restrict a group of people from accessing loans from village banks. Increasing the probability of a participant not receiving loans from village bank groups was found to decrease the likelihood that the member would improve his or her livelihood. The study recommends that village savings and credit groups should follow the ROSCA model to pool more people to participate in Village banking. Further to that, the government should come up with programmes that will guide the operations and running of village banks such as the VICOBA system of Tanzania which ensures smooth running of village banks. Additionally, village bank operations should be motivated by the betterment of group members rather than profits.