Thursday, November 13, 2008





1.0 Introduction.

This paper discusses Mombo Talanta SACCOS. Its management and operations are assessed and discussed in this paper. Further more its potential in alleviating poverty in Mombo Division is discussed in this paper as well as the shortfalls in its operation and the ways to overcome the short falls are also suggested in this paper. The conclusion summarizes the main points in the discussion.

2.0 Literature review
2.1 What is Cooperative.

Cooperative are organisations formed by the individual persons who pool together their resources to form an organisation to carry out business and through it, they improve their economic conditions of life by so doing, alleviate poverty among themselves. The members who form it are the owners as well as its clients, workers and users of its services and in so doing they share both the costs and the benefits

A cooperative can also be defined as a group of people who work together voluntarily to meet their common economic, social and cultural needs through a jointly owned and democratically enterprises .

Cooperatives are based on the values of self help, self responsibility, democracy, equality and solidarity. Cooperative member believe in honesty, openness, social responsibility and caring for others. The successful cooperatives operate under the following principles, membership is voluntary and open to all, they are democratic, members benefit according to their business with the cooperative, they are independent, they do provide education training and information, and they work together and respect the community

2.2 What is SACCOS?

According to Cooperative Society Act. Act. No 209 of 2003, SACCOS is defined as a registered society whose principal objectives is to encourage thrift among its members and to create a source of credit to its members at a fair and reasonable rate of if interest .
Savings and Credit Cooperatives eg. SACCOS, SACCAS have being in operations for some times and have been of helpful to the members through out the world and especially here in Tanzania but they are weak in terms of management; Education is needed to the members so that their capacity can built through education and training etc

3.0 Background information.
Mombo Talanta SACCOS is found in Mombo township, Mombo Division Korogwe District Tanga region along Moshi – Dar es salaam high way. It is about 40 Kilometers from Korogwe District headquarters where the District cooperative officers are found. It was started in 2004 with 6 members and registered in December 2006. The SACCOS operates in Mombo Division and the members are coming almost from all villages in Mombo Division.

3.1 Management:
The SACCOS is managed by the board with 6 members, it assumes the overall management of the SACCOS. There is also loan committee with three members from the board whose role is to review and approve loan requests. The supervision committee with three people has the role of managing finance and all SACCOS activities as per business plan. The committee also reviews vouchers and SACCOS financial operations in general. The SACCOS general assembly which meets once per year has the role of approving business plan and all decisions by the SACCOS as suggested by the board and sub committees.

Table 1: The Board Members Position and Academic Qualification.

Name Position Academic Qualification Profession Number of years in SACCOS.
Jumanne Mgaya Board Chair STD VII Farmer 3
Nuhu Mipango Assistant Board Chair. STD VII Farmer 4
Elinasafi Kingazi Member STD VII Tailor 1
Sabitina Manento Member Form IV( Certificate community development Community Development officer 1
Nkinda R.Paula Member STD VII Store Keeper 4
Maine Iddi Member STD VII Farmer 3

Source: Mombo Talanta SACCOS office (November 2007).

The board members level of education as shown in the (Table.1) above is very low, most of them are standard seven with only one member whose education level is up to form four. This may expose the SACCOS to the risk of being poorly managed or at loss incase unfaithful manager who can play with forging financial books is employed. The board has to take the initiative to plan for the frequent board seminars to trainings for themselves to acquaint themselves with the management and financial matters for them to be more effective in management.

Table 2: The Supervision Committee Members and Their Position.

Member Position Academic Qualification Profession Number of years in SACCOS
Gervas Haule Chair Person STD VII Farmer 1
Zuber Sayavuli Secretary STD VII Farmer 4
Anna Pascal Member Form IV Mwandishi wa Habari. 1

Source: Mombo Talanta SACCOS office (November 2007).

The level of education of the two members in this committee (Table 2.) is low (STD VII) compared to its function. For them to be able to perform better I think they should also plan to have workshops related to their position to develop better their skills.

3.2 Employees:

The SACCOS has two Employees one Manager/Secretary who is the in charge for all SACCOS office operations, and one Cashier whose keeps financial / loans records. The recently SACCOS general Assembly has authorized the recruitment of the third cashier which is yet to be implemented.

4.0 Objectives.

The Objectives of Mombo Talanta SACCOS are:

 To improve the economic status of its members.
 To build the habit of saving money to its members.
 To provide loans to the members for business, Agricultural inputs and implements, Livestock medicines, Small Industries, and equipments for small scale mining.
 To educate members on cooperative issues.
 To prevent HIV/AIDS transmission and Environmental Conservation.
 To train members on entrepreneurship and business management.
 To cooperate with other financial institutions to increase the SACCOS loan capital.

5.0 Members:
Mombo Talanta SACCOS started with 6 members and since then the number of members has been increased every year. To date there are 243 members from all villages. And any person from Mombo Division can be a member upon his /her willing provided he/she meets the membership requirements.

5.1 Membership requirements.

For some body to be a member he/she has to:

 Pay the entry fee of 10,000/=
 Contribute for five shares each Tsh.10,000/=
 Pass book and ledger card contributions of 2000/=
 Registration fee of 2000/=

Other requirements.

 Must be a resident of Mombo Division.
 Should be 18yrs old and above.
 Must have a sound mind.

Table 3. Membership trends since Inception to date.

Year Number of Members. Percentage increase
2004 56 0
2005 94 59.6%
2006 138 68.1%
2007 243 56.8%

Source: Mombo Talanta SACCOS Office Records (December 2007).

From the table above it is shown that the number of members has been increasing since inception to 2007. The SACCOS members increase has been caused by the sensitization which was being done frequently to the community under the SACCOS operating area by the SACCOS board. It is good to have such initiative however, the SACCOS has to have more competitive products, higher integrity, and others that makes it to be sold to the people without using the current approach which is sensitization in general meetings. This sensitization method may not be productive due to the BAD history of the collapse of former cooperatives which is still in mind of the people.

6.0 Products offered by the SACCOS.

Mombo Talanta SACCOS currently is offering loans for business, Agriculture and Education and emergency loans. Loans for Education are the ones offered to the members for school fees to their children. Emergency loans are the ones offered to the members to serve the emergence needs like attending the sick etc. and has to be paid fully within three months with the higher interest rate than the normal loans offered. The SACCOS also offered fixed deposit services, Saving services and education services.

Table 4. The products offered by the SACCOS from September to November 2007.

Month Business loans Emergency loans Agricultural loans Total
September 160 2 30 192
October 1 - - 1
November 48 - 3 51

Source: Mombo Talanta SACCOS, (December 2007).

From (Table 4) it is shown that business loans are more interested by the customers than other loans. However the low number of loans loans for Agriculture offered in this period is attributed to absence of Vuli rains which caused most farmers who are not around rivers to stop collecting loans for Agricultural purposes.

7.0 The loan Capital.

The loan capital for the SACCOS has been increasing since inception (2004) to date (2007) and the capital shoot up abruptly following the loan borrowed from CRDB bank in November 2007 which amounts to Tshs.94 Millions and also the increase of its members was at faster rate in 2007 compared to other years. The table below shows the trend of loan capital since inception to date.

Table 5. The trend of the loan capital since Inception to date.
Year Loan Capital
[Tshs] Percentage Increase
2004 9,824,980.00 0%
2005 13 749 170.00 40%
2006 29 ,486,246.00 114%
2007 172,537,931.60 485%

Source: Mombo Talanta SACCOS Office Records (December 2007).

8.0 Office Record Keeping:

Mombo Talanta SACCOS has different Tools/Books for keeping records for loan operations and memberships.

8.1 Payment Records.

The payments are well recorded in the office the payments are recorded in:

Payment Voucher- This is the voucher which records every payment paid by the SACCOS.
Bank payment Voucher- record the payments made to bank.
Dispatch Voucher- For recording cheques offered and signatures for the recipients.
Cheque List – Records the Cheques offered by the SACCOS and the Signatories who signed them.
Cheque leaf-This is the leaflets showing the number of Cheques offered by the SACCOS and also keeps the records for number of cheque books used.
Daily Summary Voucher Book- Records all payments made by the SACCOS per day.
Cheque register book- Records the Cheques prepared by the SACCOS.
Loan subsidiary ledger- Records the loans taken by SACCOS members. It shows the date the loan was offered and the date that the loan is supposed to be fully paid.
Pass book- Keeps the records for the money offered to the members and also the money deposited/paid to the SACCOS by the member. The book is stayed with the members.
Ledger Card –Is the card which has similar records as the pass book but in addition it also has the passport size (photos) for the members. The ledger card is kept in the office. It records all payments and deposits by the member loan offered and repayments.

8.2 Deposit Records.
Receipt book- The book for offering receipt for the received payments to the SACCOS.
Pass book – As seen above it records the deposits by the member. It is a member’s book kept by her/him.
Ledger Card- As seen above it records the deposits by the member. It is kept in the SACCOS office for reference.
Daily collection Record Keeping Book-It the book for recording daily collections such as loan repayment, penalties, entry fees, savings and shares paid to the SACCOS in that day.
Cash book- It records daily transactions by the SACCOS. (Records the money that is being deposited to the SACCOS and the ones paid by the SACCOS).
Daily book balance record book-It records the money remained in the SACCOS after all day payments. (It records money deposited, paid and shows the balance remained).
Cash Box book balance- Record the money kept in the cash box on daily basis. (It counts the number specific coins and notes and its values).
The main Ledger- The main ledger show all deposits and payments per month ( It records monthly income and expenditure).

8.3 SACCOS members record book.

This is the book which records the names for all members and their heirs and other important records for the members.

9. Reports and preparing periods.

The SACCOS prepares monthly financial and Statistical reports. The reports are sent to the District cooperative officer, World Vision Tanzania Zonal officer and a copy is remained in the SACCOS office.

10. The potential of Mombo Talanta SACCOS in alleviating Poverty in Mombo Division.

In assessing the potential of the SACCOS in alleviating Poverty , I looked at the products provided to its members, Conditions under which the product are offered and interviewed some SACCOS members who have been borrowing from the SACCOS. And observed tangible changes claimed by the members to happen due to SACCOS services.

The loans and the Interest.

The loans offered by the SACCOS are of two kinds. There the loans in which the members can borrow three times the amount of savings is having in the SACCOS.This loan has the interest of 20%.The other one the member can borrow up to twice the amount of their savings. The loan of this category has the interest of 10%. The different conditions for the loans as I see provides a comfortable situation to the beginners as their capital will shoot up faster due to a relief of 10% interest by so doing they will also move out of poverty at fast speed as well. The customers who feel that they want to expand their capitals faster there is also an opportunity for them as they can borrow the loans with the interest of 20%( ie. They can borrow three times the amount of their savings).

The loans offered for paying school fees enables the poor members to pay the school fees for their children. There no longer possibilities for them to fail to go to school due to lack of school fees.

The Interest rate charged for the loans are reasonable and affordable according to response from the interviewed members. They urged that the banks within their area (NMB Bank) charged up to 25% interests to the loans offered and the conditions for the loans are not affordable by the poor. They are affordable by the workers and progressive business persons. It was therefore also observed that the SACCOS conditions for loans are affordable by the poor and encourage them to borrow.

Some more interesting thing observed in the SACCOS is that there are members who joined individually and those ones who joined in group. The members who joined in group can get loans in group where by each member gets his or her loan but being in a group is liable for every ones loan in the group, and make sure every of his/her fellow retires the loan. This group lending encourages the poorest to be liable for loans however smaller they may be. It was leant in the observation that those group borrowers can grow up to the point that they are able to contribute for the personal share and savings as well as fees and having assets to be liable to join the SACCOS as Individual member and borrow as Individual member. This helps the poorer to come out of the poor. The SACCOS conditions for offering loans is broad accommodating almost people of all conditions in the operation area in order that they all have equal opportunities to borrow and work hard to alleviate poverty.

The SACCOS also provided loans for both Agriculture and business. The majority of the poor are engaging in Agricultural activities to get different needs, including food, school fees, medical services, housing and other needs. Accessing capital to expand their Agricultural activities is the potential service for the farmers to alleviate poverty.

The SACCOSS has variety of members ie. Workers, Farmers and Business persons increase its potentiality in addressing poverty to different groups of the people.

Changes observed to some Mombo Talanta SACCOS members Visited (Testimonies and Success Stories).

One Mama Lishe - Ratifa Saguti claimed her business to grow progressively, She started her business in a grass roofed hurt .But after she borrowed from the SACCOS according to her she rented a nice place for restaurant. Following that she is getting lot of customers and good profit from her business. She is now building a house of resident out of the profit she is making in the business.

Another customer Hilda Makuro who was visited and interviewed whether she is benefiting from the SACCOS she gave her testimony that she has been able to pay for college fees for her two children and bought a sisal farm of 2 hectors which is about to be harvested now.

The third customer Mr. Ali Saguti, he is doing carpentry he said that the loan from SACCOS enable him to expand his business Carpentry and increase his profit from the business greatly. Following he bought a lorry (canter ) and again borrowed from the SACCOS and added some accumulated profit from both carpentry and his lorry and bought a coaster min bus which is carrying passengers from Lushoto to Tanga via Mombo.
A success story from Mgeni Hussein-(Mombo Talanta SACCOS customer).
Title: Milk starts a retail shop.
“Mmh! You can not believe, see that retail shop, its milk”
Mgeni Hussein told me after she was asked whether she is benefiting from Mombo Talanta SACCOS, She told me that she borrowed Tshs.500, 000 from the SACCOS and bought a dairy cow incalf heifer. She continued that; “I do get 12 litres of milk per day from my cow, the customers are plenty, I do not satisfy them”
She started a retail shop from the money she got from selling milk at a capital of Tsh.200, 000 and slowly she added her capital from dairy milk sales.
“Am now able to take care of my parents and pay school fees for my young brothers” she is earning from both milk sales and return from her retail shop. “Sincerely I have benefited from the Mombo Talanta SACCOS” She said.

Mgeni Hussein in her Shop. Mgeni Hussein with her milk cow.

Steven Shegwando, a farmer from Chepete Village told me that he was able to increase the size of his paddy farm from 1 acre to 5 acres, employing casual labors, and buying enough paddy seeds after he had took a loan from Mombo Talanta SACCOS. According to him, so long as he had not harvested the crops he could not explain how the loan has changed his life. However he planned to build a modern house after harvesting as he is expecting to get a good profit after the loan repayment.

Steven Shegwando in His Paddy far. ( A Mombo Talanta SACCOS Customer).

10: Weakness in terms of operations and reliability.
Members- Coverage.
The members who are benefiting from the SACCOS are few compared with the number of the people in Mombo Division. The SACCOS members are 243 and the total population in the area is 69047 thousands. The SACCOS has enough loan capital to serve many members than the members it has. In trying to find out why there no more members than it is expected. Majority of interviewed non SACCOS members seems not to be very much aware in the capacity of the SACCOS to meet their needs in the area. This reduces the opportunity for many people to be out of poverty using SACCOS.
There is a weakness of selfishness among board members. According to SACCO’s cashiers, some board members wanted to get more benefits than those approved in the business plan. This may result to misuse of SACCOS funds. However the cashiers do not allow any transactions out of business plan. It was also noted that there are some body members whose loans repayment period is overdue. This will minimize their courage in following up the people who are not paying loans as per schedule.
Since Inception the SACCOS has not been audited. This is against the cooperative management requirements. It is also against the constitution of the Mombo Talanta SACCOS as there is a part which says that the board shall appoint/find the external auditor who will audit the SACCOS financial books and operations. This hinders the clear understanding of the SACCOS performance by both members and the outsiders who may wish to join or deposit their funds there. The integrity and capacity of the SACCOS management is sometimes measured by the audit performance and it is the one who determine for more people to join the SACCOS or not.
Security Problem.
The security officers are not having guns. The may not be able to safeguard the SACCOS properties incase they are ambushed by the thieves with guns.
Record Keeping.
Financial recording are good. But the SACCOS lacks Fixed Asset book to record the fixed assets found in their office. This may expose the SACCOS fixed assets to loss.
The SACCOS has no reliable transport to send money collected from customers to nearby bank. This endangers the safety of the SACCOS money when sending to Bank.
The repayment rate.
The repayment rate is only 85%. In trying to follow up as to why the repayment rate is not 100% the SACCOS cashier responded that there has been a weakness of giving a loan to some member before a thorough analysis of his business and integrity.

11: Ways to overcome the identified shortfalls.
Members- Few Members.
The Village, Ward and Division governments should take the initiative to sensitize their people to join Mombo Talanta SACCOS as it is the good opportunity to be used for poverty alleviation in the Division. The SACCOS also should find a means to increase its speed to market its products and services to the people.
Selfishness to Board members.
The Board members should be trained on good governance and steward ship. The supervision committee should enhance its supervision and take serious measures incase of any misappropriation of funds. For the board members who will be rigid to change the SACCOS general assembly should be informed for more action including dropping them and electing innocent members.
Lack of Auditing.
During business planning the budget for audit be included and a close follow up should be done by the board to make sure that the audit is done as per schedule. The SACCOS general assembly should demand for audit report before approving the new business plan.
Lack of guns for security.
The SACCOS board can follow the necessary procedures to obtain effective weapons (guns) from relevant authorities for security at the office.
Fixed Asset book.
The SACCOS Cashiers should buy a counter book for recording fixed assets at the SACCOS office.
Transport Problem.
The SACCOS plan to buy two motorbikes to solve the problem of transport is highly commended. This will solve the problem of transport in monitoring the customers business and sending money to the bank.
The repayment rate:
The SACCOS loan committee should make sure that they know the integrity of their customers and that their collateral can be enough to pay for the loans incase the customer fails to pay.

12. Conclusion:

Mombo Talanta SACCOS has good financial records. The SACCOS is also addressing effectively the issues of poverty. Different interest rates (10% and 20%), collateral (Group/ Individual collateral) and eligibility for membership ( i.e. Group or Individual membership) makes it exceptional in reaching customers of all levels of poverty and boost up their life standards. However the SACCOS members are few in spite of the efforts made by the SACCOS to sensitize for the more members to join the SACCOS. The few Members reduce the opportunities of the SACCOS to alleviate poverty to many people. The Government at Village, Ward and Division is expected to mobilize people effectively to join the SACCOS in order to benefit from its products to alleviate poverty.


1. Chambo S.A (1994).Cooperative in poverty Alleviation.
2. Tanzania Cooperative Development Policy (2002)
3. Ofunguo ABC.Maadili na misingi ya Ushiirka.
4. Cooperative Societies Act. no 209 of 2003.
5. Prof.A.B.C Ofunguo: Circumstances in Savings and Credit Societies Started.


Table of Contents.
“Social exclusion” has increasingly taken over from terms like poverty and deprivation as a term for describing social division. The paper discusses social exclusion, and the related term “social inclusion”, it views the meaning for both terms as written by different authors and also narrate the elements composed to each term to make it understood more clearly.

According to Wikipedia the free encyclopedia, Social exclusion relates to the alienation or disenfranchisement of certain people within a society. It is often connected to a person's social class, educational status and living standards and how these might affect their access to various opportunities. It also applies to some degree to the disabled, to minority men and women of all races, and to the elderly. Anyone who deviates in any perceived way from the norm of a population can become subject to coarse or subtle forms of social exclusion. Social exclusion is about the inability of our society to keep all groups and individuals within reach of what we expect as a society or to realize their full potential.
Social exclusion is a major cause of crime and re-offending. Removing the right to vote increases social exclusion by signaling to serve prisoners that, at least for the duration of their sentence, they are dead to society. The additional punishment of disenfranchisement is not a deterrent. There is no evidence to suggest that criminals are deterred from offending behavior by the threat of losing the right to vote..... (and) the notion of civic death for sentenced prisoners isolates still further those who are already on the margins of society and encourages them to be seen as alien to the communities to which they will return on release. Silver et al 2003, considered social Exclusion as a relational process of declining participation, solidarity and access. According to Silver, in French republican thought social exclusion refers to a rupture of the social bond or solidarity. Duffy (1995) added that “social exclusion is a broader concept than poverty, encompassing not only low material means but the inability to participate effectively in economic, social, political and cultural life and in some characterisations alienation and distance from mainstream society”
Social inclusion, its converse, is affirmative action to change the circumstances and habits that lead to (or have led to) social exclusion. Social Inclusion is a strategy to combat social exclusion, but it is not making reparations or amends for past wrongs as in Affirmative Action. It is the coordinated response to the very complex system of problems that are known as social exclusion. The notion of social inclusion can vary according to the type of strategies organizations adopted.
The concept of inclusion means the encompassing of the entire population in the performances of the individual function systems. On the one hand, this concerns access to these benefits and, on the other, dependence of individual modes of living on them. To the extent that inclusion is achieved, groups disappear that do not or only marginally participate in social living (Luhman, 1990).


Disadvantage (This involves fear of differences, intolerance, gender stereotyping, historic oppression, cultural deprivation).
Poverty (This include, unemployment, non-standard employment, inadequate income for basic needs, participation in society, stigma, embarrassment, inequality, income disparities, deprivation, insecurity, devaluation of care giving, illiteracy, lack of educational access).
Disability (This include restrictions based on limitations, overwork, time stress, undervaluing of assets available).
Marginalization (This include, silencing, barriers to participation, institutional dependency, no room for choice, not involved in decision making).
Barriers (to movement, restricted access to public spaces, social distancing, unfriendly/unhealthy environments, lack of transportation, unsustainable environments).
Denial of human rights, ( This include , restrictive policies and legislation, blaming the victims, short-term view, one dimensional, restricting eligibility for programs, lack of transparency in decision making).
Isolation, (This include segregation, distancing, competitiveness, violence and abuse, fear, shame).
Discrimination, (This include, racism, sexism, homophobia, restrictions on eligibility, no access to programs, barriers to access, withholding information, departmental silos, government jurisdictions, secretive/restricted communications, rigid boundaries) (Malcolm, 2002 ).


Valuing contributions of women and men to society, recognition of differences, valuing diversity, positive identity, anti-racist education.
Adequate income for basic needs and participation in society, poverty eradication, employment, capability for personal development, personal security, sustainable development, reducing disparities, value and support care giving.
Ability to participate, opportunities for personal development, valued social roles, recognizing competence.
Empowerment, freedom to choose, contribution to community, access to programs, resources and capacity to support participation, involved in decision making, social action.
Access, to public places and community resources, physical proximity and opportunities for interaction, healthy/supportive environments, access to transportation, sustainability.
Affirmation of human rights, enabling policies and legislation, social protection for vulnerable groups, removing systemic barriers, will to take action, long-term view, multi-dimensional, citizen participation, transparent decision making.
Belonging, social proximity, respect, recognition, cooperation, solidarity, family support, access to resources.
Entitlements, access to programs, transparent pathways to access, affirmative action, community capacity building, inter-departmental links, inter-governmental links, accountability, open channels of communication, options for change, flexibility (Malcolm 2002).


The promotion of ‘inclusive citizenship’, through which the disadvantaged engage in collective struggles for justice and recognition, has been attracting growing attention as a
solution to chronic poverty. Underlying the notion of ‘inclusive citizenship’ is a teleological view assuming that it is attained when social exclusion is countervailed through the extension of full citizenship to marginal groups. Social Inclusion speeds up community economic development as it enhances the participation and people’s involvement in the society. Social Exclusion triggers alienation in the society and can not put people together for development; it is un indicator for bad governance in the society.
1. Duffy, K.(1995) ,Social Exclusion and human dignity in Europe: Strasbourg Council of Europe.
2. Luhman Niklas (1990), Political Theory in the Welfare State (Berlin, New York: Walter de Gruyter).
3. Malcolm Shookner, 2002 An Inclusion lens, Work book for looking at social and Economic Exclusion and Inclusion: Population Health Research unit Canada.
4. Silver and Miller.( 2003), Social Exclusion the European Approach to Social Disadvantage.
5. Wikipedia Free Encyclopedia.



Box. 154 Mombo.
Phone: 0713045264.

2.1 Theoretical literature review. 3
2.1.1 Definition of poverty. 3
2.1.2 The Magnitude and level of Poverty in Developing World. 4
2.1.3. Low income communities. 5
2.1.4. Micro Enterprise Development. 5
2.1.5. Core issues to observe in designing Micro and Small Enterprises. 5
2.1.6. Best ways for lending Micro- loans for running enterprises to poor people. 7
2.1.6. 1.Loans should be provided to individuals through self selected small groups. 7 Availability of future larger loans is conditional on timely repayment of current loans. 7 Interests are charged to cover costs of operation and ensure the program’s sustainability. 8 Compulsory savings 8 focus is on the customer needs. 9
2.1. 7.The Role of MED in Poverty Alleviation. 9
2.1. 8. Constraints of MED in low income communities. 11

The paper discusses the issue of micro enterprises; it shows the role micro enterprises play in poverty alleviation in low income communities. It discusses the meaning of poverty, the magnitude/level of poverty in low income communities and clarifies what I mean when I say low income communities. In Exposing the theme the paper further discusses core issues to observe in designing micro and small enterprises, best ways for lending micro loans for enterprises to poor people, the role of MED in Poverty alleviation and constraints of MED in low income communities. The topics are organised under Theoretical review, Empirical review and Policy review. The paper is concluded by summarising the major issues discussed in the topic as well as showing opportunities for the growth of Micro Enterprises in low income communities including Tanzania.

2.1 Theoretical literature review.
2.1.1 Definition of poverty.
Poverty is defined as a state of being poor; state of being inferior, poor quality. The quality or state of being poor or indigent; want or scarcity of means of subsistence; indigence; need. Any deficiency of elements or resources that are needed or desired, or that constitute richness; as, poverty of soil; poverty of the blood; poverty of ideas .
As clarified in Wikipedia free Encyclopedia, Poverty is being without things, having little money, not material possessions and in need of essential goods. Poverty is understood in many senses, the main understanding of the term include description of material need, typically including the necessities of daily living ( food, clothing, shelter and health care). Poverty in this sense may be understood as a condition in which person or community is deprived of, and or lacks the essentials for a minimum standard of well being and life. These essentials may be material resources such as food, safe drinking water, and shelter, or they may be social resource such as access to information, education, health care, social status, political power or the opportunity to develop meaningful connections with other people in society.
2.1.2 The Magnitude and level of Poverty in Developing World.
More than one billion people in the world live by less than one dollar a day. Another 2.7 billion struggle to survive on less than two dollars per day. “About 47% of rural households are still using unprotected sources of drinking water in Tanzania. Long distances to sources of drinking water in rural area entail heavy workload on women and children” About 28.6% of Tanzanians cannot read and write in any language. There is more illiteracy among women [36%] than men [20.4%]. This is due to large gender disparities in enrollment in secondary and tertiary levels. The vulnerability of girls to cultural belief and customs, early pregnancies and sexual abuse remain challenges to enrolment and completion of schooling”. Many poor people, children and women in particular, die without ever accessing a health facility, whereas eight out of ten children die at home and six of them without any contact with formal health services. The prevalence of income poverty is still high in Tanzania. According to the household budget survey of 2000/1 the proportion of the population below the national food poverty line is 18.7% and that below the national basic needs poverty line is 35.7%. Currently, Tanzania has not been able to suffice her food security; this is because of low level technology used, depending on rain fed agriculture and inadequate implementation of different agricultural development programs. Most of Tanzania citizens are in abject /extreme poverty level .
Poverty in developing world however goes far beyond income poverty.It means having to walk more than one mile every day simply to collect water and firewood, it means suffering diseases that were eradicated from rich countries decades ago. Every year eleven million children die most under the age of five and more than six million from completely preventable of like malaria, diarrhoea and pneumonia

2.1.3. Low income communities.
These are communities found in developing countries or third world countries. The countries include Africa South of Sahara, Asia and Latin America. They poor countries and fall under the poverty line category, living between one and two dollars a day.

2.1.4. Micro Enterprise Development.
Micro Enterprise Development (MED) includes a wide array of programs designed to facilitate business start ups and growth. MED programmes always often involve educating in entrepreneurship and business management principles as well as provision of consulting or advisory services. Some MED may also assist in providing for the new business although micro lending is generally regarded to as a separate service and even those organisations that offer both services tend to separate them. MED is directed at encouraging the inception of very small businesses most of which have only one owner/employee. Small enterprises are the ones employing 10 to 49 employees while Micro enterprises are those with 1 to 9 employees.

2.1.5. Core issues to observe in designing Micro and Small Enterprises.
The policy and institutional environment. A countries legal frame work, current business practices, Government policies such as tax breaks or seed grants for Micro Small Enterprises (MSE), bureaucratic and administrative procedures, may all act either to encourage or impede MSE development . Another factor is the availability and strength of local financial services. Commercial banks, microfinance institutions, micro leasing companies and also non financial services providers such as business counselling must be adequate to support the MSE growth. The business opportunities and evolving demand in the area, This involve the Agriculture related (agro processing, input selling, food trade) and non agricultural MSE opportunities (carpentry, metal working, transport, shops, handcraft, other amenities) should be present together with government commitment to an identified target clientele. There should also be general indications that financial returns from typical MSE are attractive to this clientele. The institutional Mechanism for MSE promotion. Support needs of potential MSE entrepreneurs require identification. Business development services such as entrepreneurship training, management and planning advice and improved market information and access are likely to be needed. Assistance in making loan application and advice on dealing with financing agencies will be required. Micro and small enterprise unit may need setting up if institutional mechanisms are inadequate. Such units may incorporate teams of rural business advisors (RBAs) to strengthen links between MSEs, producers or producer organisations, other market intermediaries such as traders, processors or transporters and rural or urban businesses. Related infrastructural needs and constraints. Means may have to be found to address non- commercial constraints to MSE growth such as the poor quality of the rural roads needed to link MSEs to markets, inadequate water and electricity supplies and ineffective communication networks .

However the development of micro finance institution is needed to carry on micro loan programs for the effective development of MED in developing countries as most of the people in this area lack initial capitals for running MED. Following this, micro credit operations will also be discussed in this paper. Micro finance is one of the practical development strategies and approaches that should be implemented and supported to attain the bold ambition of reducing world poverty by half by 2015 .

2.1.6. Best ways for lending Micro- loans for running enterprises to poor people.
Micro loan programs should be implemented with care in order to reduce possibilities for loan defaulters. For the successful loan operations the following procedures can be observed.
2.1.6. 1.Loans should be provided to individuals through self selected small groups.
According to Wendy Neill (2005), In the loan groups each member is liable for her own loan but mutually liable for the loan made to all group members. For this reason members are very careful about who they enter into a group with. In effect, the borrowers, not the lender, have primary responsibility for evaluating the credit worthiness of prospective group members. In a conventional loan setting, the borrower submits an application and makes a judgement on the basis of the intended use of the loan funds as well as relevant characteristics of the borrower such as character collateral and cash flow. The group model is an indigenous and critical feature that significantly reduces the cost of credit analysis to the lender. Each member ability to service her loan depends not only on her dependability and trust worthiness, but also on the success of the enterprise being financed. Following this a group members are also interested in the nature of the project and the ability of the group member to complete the project successfully . In his on micro credit to women Chowdhury (2004) found this group method to be very effective in maintaining higher loan repayment rates in Bangladesh. He found this method to be successful and contributing to 95% repayment rate . Availability of future larger loans is conditional on timely repayment of current loans.
First, A group is provided with a small loan and the next loan can be large upon timely repayment of the former one and so on. This system encourages timely loan repayment, the promise of the future loans is critical to ensuring current repayment. Although group members are familiar they cannot be related. Peer pressure is critical to the process, when a member is unable to make timely payment the other members often make them up from their own resources. When borrowers default the relationships generally suffer. If delinquent borrower’s problems are other than temporarily, it is not unusual for the other group members to go to that person’s place of business or home and take inventory or other items to make up the shortfall. This is a good method but it can also create tension to the borrower when failed to pay his loan, and his/her properties seized by fellow group member, this is happening frequently in FINCA Tanzania. Interests are charged to cover costs of operation and ensure the program’s sustainability.
Providing a loan is costly and is arguably appropriate for those who receive the benefits to contribute toward that cost. Even if the costs for conducting a loan program are negligible, inflation will undermine the value of a loan portfolio and threaten its viability.
Micro loan programmes are costly to operate hence the operational costs must be covered from the interests charged. Interest is simply the rental charge for money and that charge is needed to cover operating expenses and compensate for inflation. According to Harns (2007), for micro finance institution to be sustainable among other things they should have to cover their costs from operational income . Wendy (2005) added that, it is not advisable to offer interest free loans to fund income generating enterprises. Compulsory savings
Individual members must participate in a savings programs as conditions for eligibility for loans. Encouraging discipline and savings mentality, this feature enhances the sustainability of loan program and reduces dependency on donor funding. Savings is a valuable service to the poor. Poor do save but they have to overcome a number of obstacles to do so including lack of secure storage places and cultural mores that regard cash as surplus. focus is on the customer needs.
This is important in order to ensure the real changes in the community. The customer needs vary as to the types of loans made the repayment terms and the ease and speed of obtaining the loan and the convenience of making payment. Most micro loans are made to finance investments in working capital such as inventory or supplies used in production or goods held for resale. As a result most programs are structured to require weekly payments. While a weekly payment scheme might make sense for a merchandising loan or manufacturing it would not be appropriate for an agricultural loan. It is also important to note that it is costly in terms of productivity if the borrower has to devote excessive time to completing a detailed loan application or to program related meetings. Successful programs find ways to take the programmes to the borrower and to make the application process relatively simple and transparent and to make the approval time frame short. Most micro loan programs are the short term loan, defined as one that requires full repayment within one year. This is due to the fact that most loans are used to define investments in working capital. The short term loans reduce the risks of loan portfolio .

2.1. 7.The Role of MED in Poverty Alleviation.

The majority of poor people in the poor communities depend on Agriculture in getting their daily needs. However factors like soil infertility, drought, and sometimes low prices for crop produce cause people to think of getting alternative sources of income for living in addition to Agriculture. Mike Albu and Andrew Scott (2001) argued that Agriculture’s central role in poor people livelihood is changing fast. Social and environmental trends including rural land hunger, declining crop prices, swelling labour forces, migration and urbanisation increases the demand for the alternative employment and off farm livelihood opportunities. Formal employment in large firms ceased to keep pace with this demand for employment, for example in Zimbabwe 700,000 school leavers compete for 40,000 formal sector jobs each year. So every year millions more turn to small informal enterprises to make a living making it a fastest growing area of employment. Between half and three quarters of those who make or supplement their livings from micro enterprises are women. Women entrepreneurs play an important role in local economies and contribute to major sources of income to their families. Micro Enterprises is seen as a source of economic salvation amongst poorer households providing them with a safety net against shocks and stresses. Rural micro enterprises have usually played a supporting role in the house holds economy, with the profits to meet immediately households’ needs .

Chowdhury studies in Bangladesh on Micro enterprises found, their role played in poverty alleviation to be, employing the majority of unemployed people, empower Women, source of income for children schooling, improve households’ nutrition and develop the private sectors which were the source of income for the majority of the poor people .

The role the Micro enterprises played in alleviating poverty in Tanzania has been found to be contributing to one third of GDP, Create employment, are more effective in the utilization of local resources using simple and affordable technology as well as fostering equitable income distribution .

Ssewamala (2006) who studied the role of Microenterprises in alleviating poverty in America argued that, Micro enterprises acts as a beacon of hope to the poor aimed at reducing vulnerability while affording the poor a basis for self empowerment, respect and social dignity. Micro enterprises help to break the vicious cycle of poverty by giving poor persons an opportunity to diversify their incomes and Accumulated assets. He further maintains that Micro enterprises provide self employment and that has potential to foster social relations/networks, civic engagement, community solidarity, social capital and social connectedness all of which may help to combat poverty .

Micro and small enterprises allow the rural poor including some of the most marginalised and vulnerable strata such as rural women, youth and the landless to diversify their income, creating new sources of economic growth and generate additional employment (including self employment) in rural areas. It is with this reason that Micro Enterprises Development becomes important strategy in alleviating poverty in poor communities. It is very relevant to include the development of Micro Enterprises in the National poverty alleviation strategy of the poor countries and in to the millennium development goals at large.

2.1. 8. Constraints of MED in low income communities.
MED in low income communities is constrained by many factors depending on different community set ups and the community level of development. However many researchers summarised some of the major ones as being insufficient capital, low technology ,illiteracy, low managerial skills, poor infrastructures, lack of adequate and timely availability of credit, limited size of the local market, lack of better ware houses or cold storage system, higher interest rates of microfinance institutions, lack of skills and efficient entrepreneurship., wasteful processing as well as natural effects as floods, drought, cyclones and pestilences diminish the production and supply of goods .


The Impact assessment study of the Rural Financial Services Programme in Mbeya, Dodoma and Kilimanjaro regions found that, The Money invested in agriculture and small businesses has created casual employment opportunities as demand for labour for crop cultivation increases. This was observed to 55% of programme participating households who had received total loans amounts to 12 billion, some other members were acting as middle men by buying crop produce from their fellow members and sell them to wholesale business people and companies outside the community and get their income out of that. The loans provided by RFSP IFAD funded projects stimulates Micro Enterprises and Agriculture in the said Regions and Increased the Income of the benefiaries. It was learnt in this study that Micro loans services are important for the development of Micro enterprises which in turn develop people economically and alleviate poverty .

The case study of SME development programme which included the integrated programme for Women Entrepreneurs in the Food Processing Industry. The programme was designed by SIDO (Small Industries Development Organisation of Tanzania) and UNIDO, and has been jointly implemented by the two organisations under the sponsorship of the Australian Government. The programme was started in 1993 in Arusha, Dar es Salaam, Iringa, Kilimanjaro, Tanga, and Morogoro regions. The programme trained women entrepreneurs and registered them and launched an association, the Tanzania food processors Association of Entrepreneurs (TAFOPA) .The project was designed in line with UNIDOs established policy to promote employment, raise income, through entrepreneurial development which in the long run will address poverty alleviation. The observed results during evaluation in 1998 were, 70% of women trained in technical and managerial courses were in business practicing what they had learnt, and out of 168 enterprises which were in operation, 24% were business expansions and 70% were new ones. 60% of women who were involved in the programme were found to be able to contribute to basic family needs such as food, clothing, payment of medical care and school fees. Furthermore through the program 320 new jobs were created in six regions .

The case study in Mongolia ,UNDP supported a three years Micro finance Programme in Mongolia started in 1998 to 2001, In that project microfinance institution were established to provide loan services to the people for initiating Small and Micro Enterprises (SME). The final evaluation of the project tested the socio economic impact of the project to the people. The standard of living before and after the programme were compared and the result was as follows, of the interviewed people those who responded that their income were not enough to buy basic needs were 10 % before the loans but 2% after the loan schemes, those who felt they could afford to buy consumption items were 32% before the loan scheme but were 41% after loan scheme and those clients who felt they could afford to buy Luxury items were 10% before loan scheme but 24% after loan scheme. The project was found to have raised the standard of living of the clients .

MED is proved to alleviate poverty in low income communities. However the promotion of Micro enters prises has to involve the development of Micro finance institutions as a strategy.
Tanzania developed a policy on small and medium enterprises (SME) of 2002 with the overall objective to foster job creation and income generation through promoting the creating of new small and medium Enterprises and improving the performance and competitiveness of the existing ones to increase their participation and contribution to the country economy. The policy has a mission to stimulate the development and growth of Small and Medium Enterprises activities through improved infrastructure, enhanced service provision and creation of conducive legal and institutional frame work so as to achieve competitiveness. The policy has also a vision to have a vibrant and dynamic small and medium enterprise sector that ensures effective utilisation of available resources to attain accelerated and sustainable growth .

The objectives, mission and vision provides a clear intention of the Government to facilitate the growth of the micro and small enterprises in the country. It is therefore the opportunity for the sector to develop further.

To facilitate the development of Micro finance institutions which are necessary for the development of small and micro enterprises the Government developed a policy for micro finance with the Vision of achieving wide spread access to micro-finance throughout the country, made possible by institutions operating on commercial principles. The policy provides a guide for the involvement of a wide range of institutions in the provision of services, including specialized and non specialised banks, non- bank financial institutions, rural community banks, cooperative banks, SACCOS and NGOs. The development of the Microfinance institution will provide will provide financial intermediation without necessarily relying on injection of external donor or Government funds. The Government considers micro finance system as an integral part of the financial sector that falls within the general framework of its Financial Sector Reform policy Statement of 1991.The Microfinance policy established a basis for the evolution of an efficient and effective micro-finance system in the country that serves the low income segment of the society .

This will again contribute to the development of Small and Micro Enterprises in Tanzania through access for loans and hence contribute to the economic growth and reduction of poverty.

MED is a sustainable strategy for poverty alleviation in low income communities as it creates a self employment and empowerment of poor people in making use of the available resource around them to bring development. Micro finance institutions are vital engines for MED operations as most of the poor people have no initial capitals for running efficient micro businesses. There is a need for every development agency to consider MED as a strategy for increasing house hold income for the poor people to change their lives. MED has opportunities to grow further as it is included in the National Strategy for Growth and Poverty Reduction for Most developing countries and it is also in line with millennium development goals as it is the best means of diversifying sources of income in most low income communities. Furthermore UNIDO- United Nations Industrial Development Organisation provides good opportunities for the development of SME in low income communities. In Tanzania there are great opportunities for the growth of Micro Enterprises as there is a policy formed by the government to provide legal and institutional framework for the development of small and medium enterprises (The National Small and Medium Enter prises Development policy) and The Microfinance development Policy promotes the development of micro finance institutions which provides opportunities for the development of SME. The existence of institutions like Small Industry development (SIDO) ,Community Banks, Cooperative banks , SACCOS and Organisations that are involved with micro enterprises development like FINCA and SEDA provides brilliant chance for the growth of SMEs.

1. Chowdhury Mahbubul Alam and Kazuhiro Miyagi: An Approachable Analysis of Micro Enterprises in Bangladesh. 2004.
2. E. White: Microfinance and Millennium Development goals: International year of Credit, 2005.
3. English free dictionary.
4. Final Evaluation Report for Micro Start project in Mongolia, 2001.
5. Fred M. Ssewamala. Using Individual development Accounts for Micro enterprise Development, Washington Press, 2006.
6. IFAD learning Notes
7. Mike Albu and Andrew Scott, Understanding livelihoods that involve microcredit, 2001.
8. National Microfinance Policy, Tanzania 2000.
9. Prof.Dr.Hans Dieter Seibel. The role of Microfinance in Rural micro enterprise development, 2007.
10. Small and Medium Enterprise Development policy, Tanzania 2002.
11. The National Strategy For Growth and Reduction of Poverty of Tanzania, VPO, 2005.
12. The Impact assessment Report on Rural Micro finance services programme, Tanzania 2006.
13. UNIDO (1999) ,Tanzania women entrepreneurs, spreading development in Food Industry.
14. Wendy Neill. Introduction to Micro Credit .Global Mission conference, 2005.
15. Wikipedia free encyclopaedia.



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Box. 154 Mombo.
2.0 What is human capital? 3
3.0 Types of human capital 4
4.0 Activities that increase Human Capital. 4
5.0. Importance of Human capital in Community Economic Development. 6
6.0. Conclusion. 6

Human capital is core factor among the factors of production. The community with smart human capital is likely to develop faster than the one which lacks. This Journal discusses what human capital is, how human capital can be increased, and contribution of human capital to community economic development. It collects views from different authors and my own views.
2.0 What is human capital?

In Wikipedia free encyclopedia, Human capital is defined as the stock of productive skills and technical knowledge embodied in labor. Adam Smith as quoted in Wikipedia further defined human capital as the acquired and useful abilities of all the inhabitants or members of the society. According to Adam Smith, the acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person and that the talents, as they make a part of his fortune, so do they likewise that of the society to which he belongs. He further said that, the improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expense, repays that expense with a profit. Adam Smith generally sees the human capital as skills, dexterity (physical, intellectual, psychological, etc) and judgment.
Many early economic theories refer to human capital simply as labor, one of three factors of production, and consider it to be a fungible resource which is homogeneous and easily interchangeable.
In Becker's book entitled Human Capital, published in 1964, human capital is considered similar to "physical means of production", e.g., factories and machines. According to him one can invest in human capital (via education, training, medical treatment) and one's outputs depend partly on the rate of return on the human capital one owns and thus, human capital is a means of production, into which additional investment yields additional output. He further argued that Human capital is substitutable, but not transferable like land, labor, or fixed capital.
Marxists see human capital as a commodity to be sold. According Karl Marx, under capitalism workers had to sell their labor power in order to receive income (wages and salaries).
3.0 Types of human capital
Human capital can be categorized as skilled labours which are the people imparted with skills and technical know how. Normally these are the people who are educated and acquired skills in different professions. Unskilled labors are another category which includes people with no skills and technical know how but endowed with tacit knowledge. Semi skilled labours category involves those people who have had vocational training.
4.0 Activities that increase Human Capital.
Human capital can be increased by education and training which includes formal education where people are trained in schools colleges and universities, workshops and seminars. Informal education which involves acquiring of skills through experience sharing and observation. Health care through provision of sufficient health services and proper nutrition. These will increase human capital. Job search makes people use their skills effectively in production for the development of the community. Migration also increases human capital to the places or country of destination. (
Migration can also decrease human capital to the migrant’s place/country of origin. For instance in Tanzania most people who have acquired skills in various professions migrate from villages to towns. The villages are left with unskilled man power. When workers migrate, their early care and education generally benefit the country/place where they move to work. And, when they have health problems or retire, their care and retirement pension will typically be paid in the new country.
Some researchers argued that the contribution of educational investment to productivity growth is negative. The accumulation of such negative results in literatures has fueled a growing skepticism on the role of schooling in the growth process. In reaction to that Angel et. al ( 2000) argued that education increased productivity and that the weak data was likely to be one of the main reasons for the discouraging results obtained in recent researches on human capital and growth. However it is true that something more is needed in addition to educational capability. This as I think is commitment in work, seriousness, accountability and willing to apply skills and techniques professionally in production by the trainees. It is true that some trainees do not deliver to the expectations because of lack of accountability, laziness, reluctance, dullness and in fewer cases lack of working facilities or poor working environment.
5.0. Importance of Human capital in Community Economic Development.
Human capital is important in economic production as it is powerful instrument in production. Human capital makes possible for improvement of the environment to bring about standard social economic life. It is a tool for innovation, institutional building and exploration. Human capital brings about sound community economic development if the opportunities and resources within community reach are efficiently utilized.
6.0. Conclusion.
Human capital is the core factor among the other factors of production. It is effective use of human capital that makes other factors and available resources to be of use and brings the growth of community economic development growth. The human capital may not be effective enough in production due to lack of skills and techniques. The skills and techniques however can be imparted to human capital through training and sharing experience and lessons learnt. For good delivery to the development however people have to be accountable, innovative, set visions and missions for development.


1. Angel de Fuente and Rafael Domenech. Human Capital in Growth Regression: How much differences does data quality make?. 2000.

2. Wikipedia encyclopedia.

3. What is Human Capital and Social capital?. Article University of Wollongong Australia; 2007. (commerce


Table of Contents:
1.0 Introduction 3
2.0 What is participation? 3
3.0 Reasons for Participation 3
4.0 Levels of Participation. 4
5.0 Why participation is important? 5
5.1 Why participation is important for government 5
5.2 Why participation is important ant to the private sector. 5
5.3 Why participation is important to the community and voluntary sector. 6
5.4 Why is participation important to the Community Economic Development? 6
5.5 What Participants gain from participation? 6
6.0 Conclusion 6
1.0 Introduction

The purpose of this Journal is to discuss on participation. The discussion covers on meaning of participation as summarized from different authors, reasons for participation levels of participation, Important of participation and it further concluded by giving my own views.

2.0 What is participation?

English dictionary defined participation as taking part in an event or activity. It is the involvement of people in decisions, services and design. Oakley, (1989) pointed out that, community participation means voluntary contribution to public programmes but people do not play a role in shaping the programmes, involvement in shaping, implementing and evaluating programmes and sharing the benefits and also an active process where intended beneficiaries influence programme outcomes and gain personal growth. He further concluded that community participation range from people passively receiving benefits from any programmes to people actively making decisions about the programme policies and activities.

3.0 Reasons for Participation

According to World Bank (1966), reasons for community participation are: Local people have a great amount of experience and insight into what works, what does not work and why, Involving local people in planning projects can increase their commitment to the project, Involving local people can help them to develop technical and managerial skills and thereby increase their opportunities for employment. Involving local people helps to increase the resources available for the programme. Involving local people is a way to bring about ‘social learning’ for both planners and beneficiaries. ‘Social learning’ means the development of partnerships between professionals and local people, in which, each group learns from the other.

Rifkin, (1990) added that participation is necessary to all people, especially the poor and disadvantaged, as they have both the right and duty to be involved in decisions that affect their daily lives

4.0 Levels of Participation.

Participation suggests some degree of involvement in an activity or an organisation. However, according to Arnstein, S. (1971) there are different levels of involvement, with some people being at the centre of activity and decision-making whilst most take more of a back seat, or passive role. There is also the important issue of how much power you actually have.

Position of power.

Delegated power Level 1 (Partnership):

Level 1 suggests that people are in positions of influence that they have a say in decision-making and that their opinions are taken into account and acted upon.

Consultation Level 2 (Informing):

Level 2 suggests that people have some involvement in an organization or community, but other people make important decisions and inform members about new policies or what action to take.

Passive involvement Level 3 (Manipulation):

Level 3 is really non-participation because although people may be members of an organisation or community, they have no real say or influence in how it operates. Members are expected to go along with decisions made by others and are powerless to make changes themselves.

5.0 Why participation is important?

5.1 Why participation is important for government
There is growing agreement across society that the state cannot (and should not) direct the actions of citizens without their co-operation, any more than the market alone can be relied upon to address the challenges of our time. Whether in dealing with climate change, natural resource management, public health concerns like diseases control and primary hygiene practices, security issues, tackling international terrorism or promoting pro-social behaviour, we are entering an era in which progress is only possible if individuals, communities and public services are each able and willing to contribute to the solution. For this to happen, public participation must become the core, not the counterpart, of the future of public service decision-making. Over time the public has grown less deferential towards authority and this means that the relationship between elected representatives and their constituents and between the institutions of the states and the citizens must change. This is why participation is important to the public sector.

5.2 Why participation is important ant to the private sector.
The boom in interest in ethical consumerism and high profile campaigns by consumer, human rights and environmental groups shows that the public is increasingly concerned about corporate accountability and transparency. Participatory methods need to be a core part of the Corporate Social Responsibility agenda is it is to amount to more than just a one way communications exercise.
5.3 Why participation is important to the community and voluntary sector.
In the future if community and voluntary groups want to be effective campaigners or advocates they will need to be able to show how they have engaged with their constituents. Most charities that deliver services are committed to user involvement. The information gathered by a forward thinking programme of engagement will allow community and voluntary groups to adapt to changing circumstances and to remain relevant in the future.
5.4 Why is participation important to the Community Economic Development?
Participation at all stages of project/ Programme design will ensure stakeholders commitment, projects or programme desired achievements and sustainability of the development activities.
5.5 What Participants gain from participation?
Public participation is not only important for organisations in the public, private and not for profit sectors, it also has the potential to change how individuals and communities live and interact. Taking part in local decision-making or discussing future policy can have a transformative effect on how people think about themselves and their role in society.

6.0 Conclusion

Participation is once again seen by many governments, the United Nations agencies and non-governmental organisations (NGOs), as critical to programme planning and poverty alleviation. Participation is central to development projects as a means to seek sustainability and equity, particularly for the poor. Participation makes possible for mobilization of financial, material and human resources in the community to speed up the community economic development, local health and environmental conditions.
Through participation, People become committed to activities that they have helped develop. People can develop skills, knowledge and experience that will aid them in their future work.

1. Arnstein S (1971) “A ladder of citizens Participation” American Institute of planners Journal.
2. Oarkly P (1989), Community Involvement in Health Development Geneva: WHO.
3. Rifkin S.B (1990) Community Participation in MCH/FP programmes an analysis based on case study materials Geneva: WHO.








1.0 Introduction: 3
2.0 What is Foreign Aid? 3
3.0. Who are the Recent Major Donors to the Developing countries?. 3
4.0 How the Foreign Aid is channeled to the poor countries. 4
5.0 What is Foreign Aid Used For.? 4
6.0 Types of Foreign Aid provided to Developing Countries. 4
8.0 Conclusion. 5

1.0 Introduction:

One of the Millennium development goals major strategy is to provide aid to the poor countries to help them to develop there economy to come out of poverty. Many national budgets for poor countries are subsidized by the developed countries. International organizations are also providing lot of support to the poor countries. In spite of all these the poverty situation in developing countries has not changed much. This paper discusses foreign aid, major donors, the way it is offered to the poor countries, what is it used for, types of foreign aids provided and whether it is effective in bringing intended changes.

2.0 What is Foreign Aid?
Foreign Aid is the help mostly economic, which may be provided to community or countries in the event of a humanitarian crisis or to achieve a socioeconomic objective. Humanitarian aid is therefore primarily used for emergency relief, while development aid aims to create long term sustainable economic growth. It is an extension of economic assistance from one nation to another. Foreign aid is a policy instrument used by most industrialized countries to achieve a variety of political, economic, and military purposes, as well as to address humanitarian concerns and assist in the long-term development of the recipient countries. (Wikipedia).
3.0. Who are the Recent Major Donors to the Developing countries?.
The most generous aid donors in recent years, measured in terms of amounts contributed, have been Japan and the United States, followed closely by the major industrialized nations of Western Europe. However, different countries appear as the most generous aid donors when their contributions are measured as percentages of their gross national product (GNP). Judged by this scale, the Scandinavian countries, especially Norway and Sweden, dedicate a relatively high percentage of their gross national product to foreign aid, while one of the most generous donors outside Europe is Kuwait.

4.0 How the Foreign Aid is channeled to the poor countries.
Aid may be given directly from one country to another or through multilateral institutions such as the International Bank for Reconstruction and Development (the World Bank), the International Monetary Fund, and various regional development banks. In recent years some aid donors, notably the United States, have increasingly emphasized direct government-to-government bilateral assistance, cutting back on funding through the international development banks and other United Nations bodies. Nevertheless, these multilateral institutions continue to play a crucial role in providing aid to developing countries in an attempt to raise living standards. The forms that aid takes are varied, ranging from the provision of long-term loans on favourable terms to the provision of technical skills and training.
5.0 What is Foreign Aid Used For.?
Perhaps the most striking example of the use of foreign aid to meet a wide variety of objectives, political and strategic as well as economic and humanitarian was the European Recovery Program, commonly known as the Marshall Plan, which was begun after the end of World War II. This US assistance to war-ravaged Western Europe aided in the reconstruction of important European allies in the Cold War, while spurring global economic development. Such aid improved international trade generally, advanced US diplomatic and military objectives, and met human needs, while also proving highly beneficial to the US national economy.
6.0 Types of Foreign Aid provided to Developing Countries.
The type of aid offered varies according to the recipient and the objectives involved. Disaster relief, for example, is usually made on a strict grant basis, while development aid is often in the form of inexpensive loans. Educational aid to provide much-needed skills may range from the operation of skills to the training of lawyers, government officials, or business people.

7.0 Is Foreign Aid Working?
Critics of international aid programmes argue that they are often ill-targeted, create dependency, or distort priorities, and that much aid money is, in some cases, siphoned off by corrupt officials in the recipient countries. They therefore maintain that aid generally has a damaging role in development economics. In response to such criticisms, much greater scrutiny has been applied recently to aid packages and the conditions on which they are given. There has also been greater encouragement of private investment in developing countries, in the belief that it is likely to be of more help in transforming their economies than aid, But this has not been practical in Tanzania For example as the most mining companies are produced direct from mine drilling areas to abroad and there is no money circulation in our countries. It is also obvious in our country that the mining sector is the great area of exploitation of our county by international metropolitants. (wikipedia).
8.0 Conclusion.

Foreign aid is provided to the poor communities in order to alleviate poverty. To minimize the differences which exist between the rich (developed countries) and the poor (developing countries). Does it make changes? The answer is not. Most of the Foreign Aids are misused by corrupt leaders and don not real address the intended needs. But how far the loans address the cause of poverty. They are perhaps treating the symptoms of poverty and they can’t make change by doing that. Are the aids build up on the existing social changes or are serving the needs projected outside the community? Were there effective community organizing/organization before support? Is the Foreign Aid aimed to buy luxurious cars for leaders? Is that addressing poverty? Is a foreign aid a right solution to poverty existing in developing countries? Is trade liberalization benefiting the poor? Should poverty be alleviated by the people out of the poor themselves? Did the economic growth of the developed countries brought about by Foreign Aid? There is a need for both Developed communities and developing communities to start looking out of their boxes and find out the real causes of poverty and thinking of social changes to build upon which will directly address the cause of poverty. However the major cause for the less impact of foreign aid to the poor is mismanagement and misuse of the aid funds by the recipient countries triggered by lack of integrity and over selfishness.

1. Prospect Magazine Issue 128, November 2006. Is Foreign Aid Working?
2. PIPA, American on Foreign Aid and World Hunger. A study of U.S Public Attitude. February 2nd 2001.
3. Wikipedia encyclopedia.





3.0 Process/methods for community organizing. 4
3.1. A progressive cycle of action-reflection. 4
3.2. Consciousness-raising through experimental learning. 4
3.3. Community organizing is participatory and mass-based. 4
3.4. Community organizing is group-centred and not leader-orientated. 5
4.0 The purpose of community organization. 5
4.1. People’s empowerment. 5
4.2. Establish structures of people’s organizations. 5


Community organizing is the first important step to be considered before starting community development works. It provides a good opportunity for designing relevant projects/ programmes to the community. This step is sometimes overlooked by many development agencies resulting to designing of unsustainable rural development projects. This journal discusses what is community organizing as is perceived by different community development practitioners. It also explains processes for community organizing and its aim/purpose. There after, the paper is concluded by giving my own remarks on community organizing.


Community organizing is a systematization of experiences in labor and other forms of organizing. At the same time, it continuously evolves and is and is constantly enriched in the process of practice. While Community organizing shares many aspects with other forms of organizing, it is distinctive, not because it is defined by the limited boundaries of communities, but because it is characterized by a package of features. Some of these are present in other forms of organizing but they are only present as a package in Community Organizing. ( ).

Community organizing can also be defined as a social change model that has the potential to bring enormous people power to bear on issues of regional inequality and sprawl. It is a social change by which disenfranchised people re engage in civic life and redefine their own relationships to people in positions of power. At its best, community organizing is a transforming experience for those involved because it engages community members, normally excluded from public life in direct action and strategic organization building. (

Community organization is that process by which the people organize themselves to ‘take charge’ of their situation and thus develop a sense of being a community together. It is a particularly effective tool for the poor and powerless as they determine for themselves the actions they will take to deal with the essential forces that are destroying their community and consequently causing them to be powerless. (Reverend Robert Linthicum, World Vision International).

Organizing does two central things to seek to rectify the problem of power imbalance — it builds a permanent base of people power so that dominant financial and institutional power can be challenged and held accountable to values of greater social, environmental and economic justice; and, it transforms individuals and communities, making them mutually respectful co-creators of public life rather than passive objects of decisions made by others. (Mike Miller, Organize Training center)

3.0 Process/methodological characteristics for community organizing.

Philippines partnership for the Development of Human Resources in Rural areas identified four processes for community organizing which are progressive cycle of action reflection, consciousness raising through experimental learning, Participatory process, and group centered.

3.1. A progressive cycle of action-reflection.

This process begins with small, local and concrete issues identified by the people and the evaluation of and reflection on the action taken by them.

3.2. Consciousness-raising through experimental learning.

This is central to the Community Organizing process because it places emphasis on the learning that emerges from concrete action and which enriches succeeding action. This
dialectic relation between theory and practice progressively raises people’s consciousness.

3.3. Community organizing is participatory and mass-based.

This is because it is primarily directed towards, and biased in favour of the poor, the powerless and the oppressed. Through a participatory process, the whole community (as much as possible) must be involved in the organizing experience.

3.4. Community organizing is group-centred and not leader-orientated.

In this process Leaders are identified, emerge and are tested through action rather than appointed or selected by some external force or entity. Thus Community Organizing seeks democratic leadership where power resides in the people.

4.0 The purpose of community organization.

4.1. People’s empowerment.

Through Community Organizing people learn to overcome their powerlessness and develop their capacity to maximize their control over their lives. They must be able to influence the course of history and erode the dehumanizing effects of powerlessness. And through the process of confronting oppressive structures and institutions, people are transformed from dehumanized objects into human beings with dignity, who can assert their rights and can control their destiny.

4.2. Establish structures of people’s organizations.

Consequently, Community Organizing aims to establish relatively permanent structures of people’s organizations, which will serve the needs and aspirations of the people and thereby ensure maximum people’s participation. It is through these structures that people learn to internalize a new system of values so that localized experiences become the building blocks upon which the blueprint of a more desirable future is based. To effectively influence the course of history towards building a more equitable and social just nation, people’s organizations and community organizers should join organizations and alliances that will promote the interests of the people without any a priori exclusion. This refers to sectoral alliances, other people’s organizations and federations, multi-sectoral coalitions, regional and national apex bodies, political parties and international social movements.

However, one must be able to see the difference between tactical alliances, which are short-term, on the level of issues, and strategic alliances, which are long-term, and subject to a more comprehensive basis of unity and solidarity with friends and like minded groups. Such alliances must ensure genuine people’s participation and the proper observation of genuine respect for the integrity of each group.


Community organizing is very important step in community development which should be used /adopted by the community development agencies which dream to achieve big success in their community development programmes.This process ensures effective community preparation for participating in whatever kind of interventions in their community. Community organizing empowers people for development. It joins powerless to become powerful. Community organizing brings people together for project designing and preparation of a community vision.


1. Livable communities @ work, Funders’ Network for Smart Growth and livable communities. Vol.1 No. 1 (2002).

2. Community organizing, Article by Philippine Partnership for the development of Human Resources in Rural areas. (