Contribution of Microfinance Institutions to Poverty Reduction in Rwanda. A Case Study of SACCOSeruka/ Gisenyi

ABSTRACT: The study aimed at assessing the contribution of microfinance institutions to poverty reductions in Rwandausing a case study ofSACCO Seruka/ Gisenyi. Independent variables weresaving services, loan services, and technical guidance provided by SACCO Seruka/ Gisenyi. The study was descriptive research using quantitative method in data collection through a questionnaire designed in form five levels Likert scale. The study population was 16818 people including 18 employees and 16818 members. The study used a sample size of 391 computed using Yamane formula. The results of the study indicated that respondents strongly agreed on the following: (i) saving services have a significant positive contribution to poverty reduction in Gisenyi Sector (x̄= 4.278; σ= .448); (ii) loan services have a significant positive contribution to poverty reduction in Gisenyi Sector (x̄= 4.25; σ= .433); (iii) technical guidance has a significant positive contribution to poverty reduction in Gisenyi Sector (x̄= 4.32; σ= .471). (iv) Challenges to faced by members in accessing credit services offered by SACCO SERUKA /Gisenyi include lack of collateral security (Mean= 4.20, S.D=0.401); low level of saving (Mean= 4.21, S.D=0.408); high interest rate on credit (Mean= 4.22, S.D=0.416); complicated conditions required by Microfinance institutions (Mean= 4.39, S.D=0.489). (v) Proposed solutions include: reinforcing guarantee fund (Mean= 4.25, S.D=0.435); saving mobilization (Mean= 4.27, S.D=0.447); lowering interest rate on credit (Mean= 4.31, S.D=0.466); reasonable conditions required by Microfinance institution (Mean= 4.30, S.D=0.462).

KEY WORDS: Microfinance Institutions, Poverty Reduction, Rwanda.