ABSTRACT
This study was meant to assess the factors affecting the performance of local government authorities to grant loans to registered groups of entrepreneurs: The case study was Dar es Salaam city council from Dar es Salaam region, Tanzania. The study's specific objectives were to examine the effects of the financial capacity of the Dar es Salaam city council to grant loans to registered groups of entrepreneurs at local levels. The sample size of this study was 133 respondents obtained from the departments of Finance and Accounts and the Department of community development from the district council. This study was guided by capability theory and information theories of credit. This study used a descriptive research design with both quantitative and qualitative approaches. Data collection instruments were questionnaires, interviews, and documentary reviews. Descriptive statistical analysis was done using quantitative data and content analysis. Findings showed that the factors that affect the performance of LGAs to grant loans are inadequate capacity of the community development departments at the Council level to manage and provide business supervision services to groups of entrepreneurs and loan repayments. This has affected the revolving fund to operate effectively. also shows that Dar es Salaam city council has poor revenue collection strategies that affect Councils to reach the revenue collection capacity. It, in turn, affects the loans granted to entrepreneurs, thus providing less than 10% of collected revenues as required by law and regulations. Also, the study shows that most groups of entrepreneurs fail to recover loans granted by LGAs due to the long distance of borrowers from their households to repayment points. Repayment default automatically affects the sustainability of the Council's revolving fund. Most respondents suggested that mobile phone services such as MPESA, TIGOPESA, and Airtel money be used in loan repayment because they are very convenient than  other  transactions. The study also showed that another factor that affects councils in granting loans to registered groups of entrepreneurs is the lack of training programs and monitoring of loan beneficiaries. There is a need to establish a credit database, train beneficiaries, develop new loan repayment methods, enhance capacity in own source revenue collection, and combat corruption. Finally, the study recommended that internal and external audits should be considered seriously by the Dar es Salaam city council and work on them for further improvement of the loan programme.