Internal Control System and Financial Performance of Cooperatives in Rwanda: A Case of Zigama Credit and Saving Society


  • Nzimurinda Elysee Mount Kenya University, Kigali, Rwanda
  • Dr. Osiemo A. Kengere Mount Kenya University, Kigali, Rwanda



This paper examined the contribution of internal control system on financial performance of cooperative banks in Rwanda with reference to Zigama Credit and Saving Society. Specifically, the study assessed effect of control environment on control activities and risk assessment on financial performance of Zigama Credit and Saving Society. The significance of research will be on practitioners, decision makers and researchers to get the knowledge about internal control system. The researcher used descriptive and correlation study design with a mixed approach on a sample of 167 participants drawn from 287 population using Yamane formula. Simple random technique was employed to obtain respondents and purposive sampling techniques are employed to choose participants and information were collected using questionnaire administered to respondents. Data entry, response code, edit and tabulation were used for data analysis. Data were analysed descriptively and regression analysis helped to general association between independent and dependent variables. Qualitative information analysis used content analysis. Data from the first objective felt that a unity of variation in control environment may stimulate a change in financial success by 0.482. The research established that financial cooperatives had conducive environment. To the second objective, the study show that a unit of adjustment in control activities stimulate variation on financial success by 0.214. Information established that financial cooperative has accounting system, which is strong enough to stimulate financial success through the reduction of risks and errors. Findings on the objective three demonstrated that a unit variation should lead to a change in identifying risks in financial success by 0.101. Results indicated that assessing risks as factor of internal control of the firm impact the financial success this show that managing risks had put in place assessment for reducing critical risks that can come from risk management where they had to assess risk that they are committed to assume responsibilities. In conclusion, the adequate control environment for suitable functions to the success through audit done and the extent to which workers are committed is still at minimum level. The second objective showed that strategic measures established for detecting frauds and errors are applied in way that is inadequate, the review of daily transactions is sometimes done. The third objective showed that strategic measures established to identify, analysis and reduce risks are applied inconsistently. The study recommended that managing team would rely on the clarification of duties, follow up, cost revision, and should rely on risk measurements. Review of daily transactions should on daily basis workers should be trained on regular basis so as to enhance their ethical values and their commitment at work place. Rigorous policies and procedure manual must be applied accordingly. There is a need to ascertain the use of resources that provide financial means to equity ratio has been improved in the last three years. There is a need to improve the adequacy and suitability for increasing the success of Zigama Credit and Saving Society in Rwanda. The research proposed that further studies would be done within other banking sector than Zigama Credit and Saving Society in Rwanda.

Keywords: Internal Control system, Cooperative, Risk assessment, Control activities, and Financial Performance  

Author Biographies

Nzimurinda Elysee , Mount Kenya University, Kigali, Rwanda

School of Business and Economics, Mount Kenya University, Kigali, Rwanda

Dr. Osiemo A. Kengere, Mount Kenya University, Kigali, Rwanda

School of Business and Economics, Mount Kenya University, Kigali, Rwanda


Ahmed, S. O., & Ng’anga, P. (2019). Internal Control Practices and Financial Performance of County Governments in the Coastal Region of Kenya. International Journal of Current Aspects, 29-41

Akimana, K. J. (2019). Effect of internal controls on financial performance of small and medium enterprises in Nairobi County (Doctoral dissertation), United States International University-Africa, Nairobi.

Alarussi, A. S., & Alhaderi, S. M. (2018). Factors affecting profitability in Malaysia. Journal of Economic Studies, 45(3), 442-458.

Alawattegama, K. (2018). The Impact of Enterprise Risk Management on Firm Performance: Evidence from Sri Lankan Banking and Finance Industry. International Journal of Business and Management, 13(1), 225-237

Amudo, A. and Inanga, E. (2019). Evaluation of Internal Control System on regional member countries of East African Development Bank: A Case Study from Uganda

Anh, T. Thi, L. Quang, H. and Thi, T. (2020). Factors influencing the effectiveness of internal control in cement manufacturing companies. Management Science10 (1), 133-142.

Auditor General Report, AGR (2020). Report of the Auditor General to Parliament for the Financial Year Ended 30th June 2020. The Office of the AG, Republic of Uganda, February, 2021

Avortri, G, Nabukalu, B and Nabyonga-Orem, J. (2019). Supportive supervision to improve service delivery in low-income countries: is there a conceptual problem or a strategy problem? BMJ Global Health Journal, 4 (9), 4-5

National Bank of Rwanda [BNR], (2019). Annual financial stability report, 2018-2019. Rwanda: government publications

Botti, F. Corsi, M., & Zacchia, G. (2018). A new European microfinance panel data set: The European Microfinance Network survey 2006-2015 (No. 13d43173-6966-45ab-b920- fb4e43803764).

Bryman, A. (2018). Social Research Methods. Oxford: Oxford University Press, 181-270

Chen, H., Yang, D., Zhang, J. and Zhou, H. (2020). Internal controls, risk management, and cash holdings. Journal of Corporate Finance, 64, 101695

Creswell, J. (2018). Research design: Qualitative, quantitative and mixed method approaches. London: Sage.

Duncan, J. (2020). Impacting Nonprofit Financial performance and Mission

Eton, M. (2019). Internal Control and Budget Implementation in Kabale District Uganda.

Eton, M., Murezi, C., Mwosi, F. Bernard, P and Ogwel, P. (2018). Internal control systems and financial accountability in Uganda: A case of selected districts in western Uganda. International Journal of Technology Management. 4. 106-111.

Fatihudin, D., & Mochklas, M. (2018). How Measuring Financial. International Journal of Civil Engineering and Technology. 9(6), 553–557.

Foster, P. L. (2019). Coso Internal Control – Integrated Framework : An Implementation Guide. (January). New York: PWC

Francis, S., & Imiete, B. U. (2018). Internal control system as a mechanism for effective fund management of universities in Bayelsa State, Nigeria. Global Journal of Social Sciences, 17(1), 77-91

Gosnik, D. (2019). Core Business Process Management and Company Performance. Management Journal, 14 (1), 59-86.

Grondys, K.; Slusarczyk, O. Hussain, H.I. and Androniceanu, A. (2021). Risk Assessment of the SME Sector Operations during the COVID-19 Pandemic. International Journal of Environmental Research in Public Health, 18 (1), 4-9

Henk, O. (2020). Internal control through the lens of institutional work: a systematic literature review. Journal of Management Control. 31 (1), 1-4.

Kisanyanya, A. G. (2018). Internal controls and Financial Performance of Public Institutions of Higher Learning in Vihiga County, Kenya. Journal of Business and Management, pp. 31–41.

Kisanyanya, G. A. (2018). Internal control systems and financial performance of public institutions of higher learning in Vihiga County, Kenya (Doctoral dissertation). Kenyatta University, Nairobi.

Kumuyange E. (2020). Internal organizational factors and financial Performance of cooperatives in Rwanda: A case of Zigama CSS. A Research project submitted in partial fulfillment for the award of a Degree in Master of Business Administration (Finance Option) Mount Kenya University, Rwanda. Kigali, Rwanda.

Lauren, T. (2020). Stratified Sampling | A Step-by-Step Guide with Examples

Mbilla, S. A., Nyeadi, J. D., Gbegble, M. K., & Ayimpoya, R. N. (2020). Assessing the Impact of Monitoring, Information and Communication on Banks Performance in Ghana. Asian Journal of Economics, Business and Accounting, 58-71.

MINECOFIN (2018). Key Statistics on Rwanda statistics on Rwanda_Feb_25.pdf Accessed 1st Dec 2019.

Mmari, G. A., & Thinyane, L. C. (2019). Analysis of Factors Influencing Financial Performance of Savings and Credit Co-operative Societies in Lesotho: Evidence From Maseru District. International Journal of Financial Research, 10(2)

Muhunga, B. J. K., Kamukama, N., & Kijjambu, F. N. (2020). Control Environment and financial performance of savings and credit cooperatives (SACCOs) in mid-western Uganda. International Journal of Business, Strategies ISSN 2519-0857.

Muhunyo, B. M., & Jagongo, A. O. (2018). Effect of internal control systems on financial performance of public institutions of higher learning in Nairobi city county, Kenya (Doctoral dissertation). Kenyatta University, Nairobi.

Mutesi A, Mulyung, P.(2021). Effect of Cash Management on the Financial Performance of Cooperative Banks in Rwanda: A Case of Zigma CSS. Invention Journal of Research Technology in Engineering & Management (IJRTEM). Volume 2 Issue 5 ǁ May 2018 ǁ PP 88-98

Mwende, R., & Njogu, G. (2021). The Effect of Internal Control Systems on the Financial Performance of NSE Listed Banks. International Journal of Business and Management Sciences,Vol 2, Issue 4.

National Bank of Rwanda [BNR]. (2020). Banking sector annual report 2019-2020.Kigali. Rwanda

Nduba, M. P. (2018). Factors Affecting Financial Sustainability of Microfinance Institutions in Democratic Republic of Congo: The Case Study of MFIs in the City of Kindu Doctoral dissertation, United States International University-Africa.

Onsongo, S. Muathe, M. and Mwangi, L. (2020). Financial Risk and Financial Performance: Evidence and Insights from Commercial and Services Listed Companies in Nairobi Securities Exchange, Kenya. International journal of Financial studies, 8(51), 1-15

Pina, V. Bachiller, P. and Ripoll, L. (2020). Testing the reliability of financial performance. The case of Spanish local governments. Sustainability, 12(17), 6880.

Rafindadi, A. and Olanrewaju, Z. (2019). Internal Control System, Sustainable Management and Service Delivery of NGO’s in Nigeria: An Empirical Analysis. International Review of Management and Marketing, 9(2), 89.

Sharma, R. and Senan, N. (2019). A study on effectiveness of internal control system in selected banks in Saudi Arabia. Asian Journal of Managerial Science, 8(1), 41-47.

Sulbha Wagh, (2020), data management Guide.htm#anchor1585345

Toufaili, B. (2021). The Impact of Risk Management on Financial Performance. “The EUrASEANs: journal on global socio-economic dynamics 3 (28); ISSN 2539 – 5645

Uwingabiye, J. M. (2019). Internal Control Components and Financial Performance in Public Institutions in Rwanda, A postgraduate Thesis; Rwanda Social Security Board (RSSB)

Uwingabiye, M. J. (2019). Internal control components and financial performance in public institutions in Rwanda: A case study of Rwanda social security board (RSSB). UR, Huye.

Uwingabiye, M.J. (2019). Internal control components and financial performance in Public Institutions in Rwanda. A thesis submitted in partial fulfilment for the requirements of Master of Business Administration. University of Rwanda. Kigali, Rwanda.

Vichet, S. (2020). High but Fragile Growth: Fostering SMEs development to improve Cambodia’s economic resilience. Munich Personal RePEc Archive, MPRA Paper No. 104935

Younas, A. and Kassim, A. (2019). Essentiality of internal control in Audit process. Center for Promoting Education and Research (CPER) USA. International Journal of Business and Applied Social Science (IJBASS), 5 (11), 1-6

Zigama Credit and Saving Society [ZCSS]. (2019). Bank operations manual. Kigali, Rwanda.

Zigama Credit and Saving Society. [ZCSS] (2019). Human Capital Management Manual. Kigali, Rwanda.

Zigama Credit and Saving Society. [ZCSS] (2019). Risk Management and Legal Departments. Kigali, Rwanda.

Zigama Credit and Saving Society. [ZCSS](2019). Treasury Management. Kigali, Rwanda.

Zigama CSS Rwanda Ltd [Zigama CSS] (2022). Annual Reports. Kigali, Rwanda.




How to Cite

Nzimurinda, E., & Kengere, O. A. (2023). Internal Control System and Financial Performance of Cooperatives in Rwanda: A Case of Zigama Credit and Saving Society. Journal of Finance and Accounting, 7(3), 101–118.