Translation:Zahanati ya kijijini
It's a locative derivation, essentially making it mean "village place", converting the village into a location rather than a thing.
The -ni suffix is most commonly used when the word has to be the place in the sentence, but it is not really like "in/to/from" in English but more like "location of". You can think of this as making it not like "the village dispensary" but the "in-village dispensary".
It's also found in some other compounds such as:
simu ya mkononi "mobile phone / cell phone"
(in-hand phone, phone of hand-location)
taa ya barabarani "traffic light"
(on-street light, light of street-location)