Microfinance institution and its impact in Poverty Reduction in Rwanda (2009-2012) Case study; COPEDU LTD

Abstract

The general objective of the present study was to explore how microfinance institutions help in reducing poverty among people who have access to microfinance institutions by borrowing loans from those microfinance institutions. Specifically to assess the contribution of COPEDU Ltd as a microfinance institution to the socio economic development of beneficiaries, to investigate the perceptions of micro finance beneficiaries on the poverty reduction strategies put in place by COPEDU Ltd and to determine the impact of COPEDU Ltd as microfinance institutions to poverty reduction. Sample of 56 respondents from 317 clients of COPEDU Ltd was taken and SPSS 18.0 was used for data entry and analysis. The results have shown that on whether in COPEDU Ltd as a microfinance institution, the loans given are for fighting poverty among beneficiaries and the results are showing that 23 respondents representing 41.1% have strongly agreed to the assertion, 13 respondents representing 23.2% have agreed and eight respondents representing 14.3% have kept neutral to the affirmation while other eight respondents representing 14.3% similarly have disagreed and only four respondents representing 7.1% have strongly disagreed to the assertion. The income levels before and after the joining COPEDU shows that the number of beneficiaries having less than 5000Rwfs of income reduced from 10.3% before working with COPEDU up to 0% after working with COPEDU Ltd and those having above 30000 increased from 4.4% up to 32.4%. Before the intervention of COPEDU Ltd the great percentage of 36.8% had no income and only 2.9% had above 20000. After the intervention the income of beneficiaries is distributed as follows: none has less than 5000, only 7.4% have between 5000-10000, 47.1% have between 10000-20000 and 46.6% have above 20000. To evaluate the contribution of the intervention of COPEDU Ltd on the increase in income of their beneficiaries, the multiple linear regression analysis has been used. The R-square of the model is 0.87. This is to mean that the 87% of variation in income of beneficiaries after the intervention of COPEDU Ltd can be explained by the regression model provided. The adjusted R-squared is often used to summarize the fit as it takes into account the the number of variables in the model. For the above model,it is 0.860 and it shows how the income of beneficiaries is explained by variable such as age, intervention, saving, income before the intervention and the duration of intervention at 86%. Conclusively, COPEDU Ltd plays a big role on poverty reduction as indicated by increased incomes which in turn are used for basic needs satisfaction and future economic development prospects and the inference is made to generally micro finance institutions, in their activities they reduce poverty levels among beneficiaries in Rwanda.