Impact of Financial Institutions Services on SMEs Development in Rwanda. Case study: Selected SMEs in Gisozi Sector (2020-2023)

Abstract

he general objective of this study is to analyse the impact of financial institutions services on SMEs development in Rwanda. The specific objectives are to analyse effectiveness of financial services offered to SMEs Owners in Gisozi Sector and to determine the contribution of financial services on development of SMEs in Gisozi Sector. The data was collected by using questionnaires, interview, observation and documentation techniques with a sample size of 100 members of SMEs selected in Gisozi Sector. The findings show that Financial services have facilitated easier access to capital for business expansion (Mean = 4.31, Std. dev = 0.716): this statement has a high mean score, indicating that most respondents strongly agree that financial services have played a significant role in facilitating easier access to capital for business expansion. The relatively low standard deviation suggests that the responses were consistent across participants. With a mean of 4.28, respondents generally agree that the availability of financial products has positively impacted their business’s expansion ability. The high mean score of 4.57 indicates a consensus on the positive impact, with a low standard deviation of 0.471, suggesting consistent responses across participants. Financial literacy programs are recognized as significantly improving employment prospects in the sector, reflected by a high mean score of 4.53. This suggests that educating individuals on financial management and services has contributed to better employment outcomes. Investment in financial services is perceived to have a positive influence on local employment rates, with a mean of 4.33. The survey indicates that (Mean=3.84 and Std.=0.741) believe the training provided by financial services is crucial for boosting sales. Training programs can equip entrepreneurs with necessary skills such as marketing techniques, customer service excellence, and operational management which are vital for enhancing sales capabilities. The researcher recommended Financial Institutions should think and ask BNR to revise the interest rate scheme to an affordable rate so that SMEs can able to access loans since the study revealed that high interest rate is limiting SMEs from applying for loans.