Contribution of Digital Financial Services to Financial Inclusion Promotion in Rwanda: A Case of Musanze District
DOI:
https://doi.org/10.53819/81018102t5319Abstract
This study examined the money transfer service, mobile loan service, remittance service and how they contribute to the financial inclusion in Musanze district. The study used a descriptive research design to investigate the relationship between digital financial services and financial inclusion Musanze district, Rwanda. This study adopted a mixed approach, as both quantitative and qualitative techniques were used. The population of the study were adult inhabitants of Musanze District, i.e., those with a national identity card, which is a prerequisite for opening a mobile money account. The primary data were collected using questionnaire and interview guides. The questionnaire findings on the first specific objective gave a mean score was 4.04 (std = 1.069) indicating that the respondents highly agreed that money transfer services contribute to financial inclusion and with very low divergence. On the second objective, the overall mean was 3.94 (std=1.00) showing that there was general agreement among respondents on the fact that mobile loan services contribute to financial inclusion. On the third specific objective, an overall mean of 4.24 (std=0.82) was obtained indicating that most of the respondents agreed that remittance services contribute to financial inclusion. The regression was fairly fit with an R2 = 0.597, implying that digital financial services, namely money transfer services, mobile loan services, and remittance services increase financial inclusion in Rwanda by 59.7%. As per the ANOVA analysis, the regression model (F = 186.821, p = 0.001) was proved to be statistically significant since the p-value was less than the 5% threshold. All the three null hypotheses were rejected at 5% level of significance. This implied that money transfer services, mobile loan services, and remittance services significantly contribute to financial inclusion in Rwanda. From the interview session, the respondents unanimously agreed that digital financial services (DFS) like money transfer, mobile loans, and remittances are the primary drivers of financial inclusion in Musanze District by decentralizing services and creating jobs for agents. Most emphasized the role of mobile money and banking agents in bringing services closer, increasing usage through easy access, although income was cited as a key factor for transacting. Financial literacy and low, seasonal incomes from agriculture were identified as major barriers, with people reluctant to join formal finance due to a cash-at-home mindset and financial inactivity when income is low. The study recommends that mobile financial service providers should enhance the security of their platforms and improve customer support to attract more users. The study also recommends that the regulatory bodies to provide guidelines and rules to be used in the use of telephones as tools for financial services.
Keywords: Contribution, digital, financial services and financial inclusion, Rwanda
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