Determinants of Group Loans Uptake at the Local Government Authorities (LGAs) Fund among Youths at Mwanga District Council, Tanzania

Abstract

This study examines why youth groups in Mwanga District, Tanzania show low uptake of a Local Government loan fund designed to improve credit access. A cross-sectional mixed - methods design was employed, collecting data via questionnaires from 122 youth group leaders selected through stratefied cluster sampling. A highly predictive model (Nagelkerke R² = 0.90), identified four key determinants: Marital status, non-farm economic activities, positive borrower attitude and the loan amount requested. Notably, only 36.9% of groups received their full applied amount. Major barriers were perceptual (widespread favortism at 71.3%) and institutional (impractical short repayment periods at 67.9%). The study conclude that low uptake results from a misalignment between the fund’s design and  youth entrepreneurs’ reality. It recommends transparent merit-based administration, redesigning loan terms to match business cash flows, simplifying procedures and adding mandatory financial literacy training to enhance the fund’s effectiveness for youth entrepreneurship and financial inclusion.