Financial inclusion and social economic development of districts in Rwanda: a case study of Musanze District

Abstract

This study analysed the effect of financial inclusion on the social economic development of local government in Rwanda taking Musanze district as the case study covering a period from 2011 2013. The main objective of this study was to assess the effect of financial inclusion on the development local governments taking Musanze districts as the case study. The study was guided by the following specific objectives. A conceptual framework showing the relationship between variables was designed from which the analysis was made. The independent variable was measured by financial inclusion and the dependent variable was measured by social economic development. The model also shows other variables which affect the dependent variable. A multi-method approach composed of qualitative and quantitative design was used. A population of 2000 member of the household community was selected from two sectors. The sample was determined using Rao software from which 92 respondents were selected. Questionnaire and interview was used to correct primary data whereas on-desk research was used to correct secondary data. Data was processed and summarised into frequency table using the statistical package for social sciences (SPSS) from which analysis was made. The results from the survey indicated use of financial inclusion as 95.5% indicated that they have accounts with the banks, 45.5% they use mobile money, 51.5% have had access to loan from banks, 48.5% have had access to insurance services. A number of benefits have been derived by the community through financial inclusion. The results indicated that the respondents have managed to make savings, build houses, pay school fees for their children, and bought land. Based on the results it is indicative that financial inclusion is a key driver in the social economic development of the local government. Based on the findings, the following recommendations were developed. The government should put in place a guarantee fund in order to enable even those without security to have access to loans. Financial institutions should advertise other services they offer to the general public so that the community can be able to access those services. For example insurance companies must sensitise the community on other products they have apart from health insurance and banks should sensitise the community on fixed deposit accounts. More still financial institution considers educating the community on how to manage finance.