Effect of Financial Inclusion on Household Incomes in Rwanda: Case of Umurenge Savings and Credit Cooperatives in Southern Province
DOI:
https://doi.org/10.53819/81018102t2315Abstract
The objective of the study was to examine the effect of financial inclusion on household income in Rwanda’s Southern province. The study was motivated by the fact despite Rwanda government’s efforts to improve financial inclusion by strengthening the operations of Umurenge SACCOs throughout the country, the Fifth Integrated Household Living Conditions Survey (EICV5 2016/17) shows that the Southern province in Rwanda experiences the highest proportion of poor people at household which is at 36%. The public good theory of financial inclusion, income-led theory, inclusive growth theory and capability approach of financial inclusion form the theoretical foundation of this research. The sample size was 400 who included household heads who were members of Umurenge SACCO. However, 298 (74.5% response rate) were able to complete the survey. Stratified simple random sampling technique was used to select this sample. The researcher used correlational and cross-sectional survey designes. The close-ended questionnaire was used for collecting data. Data was analyzed through descriptive analysis (means and standard deviations) and inferential analysis (correlation and regression analysis). Findings show that access to affordable finance has a significant effect on household income in Rwanda’s Southern Province (β=.122, p<.05). However, it is observed that financial literacy has no significant effect on household incomes in Rwanda’s Southern Province (β=.018, p>.05). Similarly, access to credit has no significant effect on household income in Southern Province (β=.268, p>.05). The research recommends enhancing access to affordable financial services, improving comprehensive financial education, addressing income disparities through diversified income sources, supporting skill development to promote household financial stability in the Southern province. The findings are likely to help household heads to understand the effect of financial inclusion on household income and be able to make more informed financial decisions on how to enhance access to the much needed financial services.
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