Dissertation (MA Development Studies)In order to increase the outreach of financial services to community members, especially in the rural areas, community owned and managed microfinance institutions were introduced to curb the problems associated with the present microfinance institutions. One approach of community owned and managed microfinance is the Village Savings and Loan Association (VSLA) methodology. The purpose of a VSLA is to provide simple savings and loan facilities in a community that does not have easy access to formal financial services. The study was conducted within the Dodoma Municipality in the wards of Makole, Ipagala, Tambukareli, Kikuyu and Kisasa where the VSLA groups are operating. The main objective of the study was to assess the prevailing challenges and opportunities faced by community owned and managed microfinance institutions using the Village Savings and Loans Associations as the case study. Specifically the study explored the nature, dimensions and rationale of the formation of community owned and managed microfinance institutions i.e. VSLAs in Dodoma and also to assess the performance of Village Savings and Loans Associations (VSLA) methodology of microfinance delivery through community ownership and management and lastly to identify the challenges of building community owned and managed microfinance institutions and sustaining them. The findings of the study were drawn from the data collected from eighty four (84) respondents of which, eighty (80) were members of the VSLA groups, fifteen of these members were also the office bearers who consisted of one chairperson, treasurer and a secretary from each group covered as well as four field officers from CODERT Dodoma. Data collection methods used included survey and interviews. Secondary information was obtained through review of literature from published and unpublished documents, reports and journals through which the VSLA methodology was seen to be an effective mechanism for helping the poor in the rural areas gain access to financial services. The major challenges faced by the VSLA were that members were more concerned with buying shares than repaying their loans and that there was no effective mechanism to deal with those who failed to repay their loans during a cycle. However, the VSLA methodology had brought about a culture of savings among the members and that they are able to effectively cope with financial shock which may occur within the household. There is a strong need for CODERT to develop effective means for the VSLA member to be able to recuperate their lost savings if they have guaranteed loans of other members which have not been paid. For those members of the VSLA groups who do not have any income generating activity, CODERT must provide entrepreneurial skill for these members as this will reduce the increase rate in outstanding loans by these members.