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The purpose of this paper is to provide generalised views on ways in which field practice in Tanzania deviates from the village savings and lending associations (VSLA) methodology.

The research applied “participant observation method” involving actual participation in the weekly meetings of the surveyed savings groups.

Field practices deviate from the VSLA methodology. Deviations include the tendency for the savings groups to simplify financial intermediation by regressing from using loan guarantors, relying on external enforcement to recover debts from group members (rather than depending on within group enforcement mechanisms), use of social funds to recover loans, limited attendance in weekly group meetings and accumulation of debts towards share-out dates.

Results from this study are relevant to Ilala district where VSLA groups were sampled from. Cautious reading is therefore necessary when attempting to generalise findings to other areas with different social, economic and institution settings.

VSLA model needs to consider a number of issues. They include devising means to accommodate field realities; from simplification of financial intermediation activities to the dependence of the savings groups on external enforcement.

Social implications include a possible improved VSLA model based on the findings from this study, to further advance the performance of community-based savings groups.

By revealing the deviation of the VSLA methodology from the practice, the study adds value to the literature which is largely dominated by economic and poverty impact of savings groups.