A Dissertation Submitted to the School of Business in partial fulfillment of the requirement for the award of Master of Science in Entrepreneurship (MSc. Entrepreneurship) of Mzumbe University.Village Community Banks (VICOBA) is an effective informal microcredit institution which enhances the welfare of the most vulnerable children (MVC) and households. Saving through VICOBA improved survival, health and wellbeing of the vulnerable children, by giving the poor communities the opportunity to discover their inherent power and capacity to change the horizons through VICOBA operations. The general purpose of this study was to assess the contribution of VICOBA to the welfare of the most vulnerable children. the specific objective was to assess the perceptions of the community on the MVCs problems, to identify support services offered to MVC by members of VICOBA, to examine the potentialities of VICOBA in reduction of vulnerability to children and families, to explore the challenges facing members of VICOBA in supporting MVC. A total of 60 respondents were randomly selected among beneficiaries of VICOBA. Data were collected through questionnaires, in-depth interviews, focus group discussions and documentary reviews. Data were analysed using Statistical Package for Social Sciences (SPSS) computer programme in which frequencies and percentages were obtained. The result findings revealed that the majority of the respondent suggested that MVCs have high problems in accessing basic needs. But the borrowers had managed to increase their household income to the tune that they were able to meet some of the household basic needs which were formerly unmet. Furthermore, the study result indicated that low capital and small loans, loan diversion and large family size were the main challenge faced by borrowers, that contributed to less profitability of their enterprises and hence, hampering the growth of micro-enterprises. Nevertheless, the study recommends that, urgent effort should be done by all stakeholders – government and development agencies to increase anti-poverty programmes in order to boost rural households’ income.