The Role of Financial Institutions In Poverty Reduction In Kigali City, A case study of Fumbwe Umurenge SACCO

The research study examined the role of financial institutions in poverty reduction in Kigali City with special reference to Fumbwe Umurenge SACCO. Questionnaires, interviews and documentary review methods were used to gather data from respondents. The findings of the study indicated that financial institutions play the role of offering long and short term loans, business counselling, education, money transfers and insurance. The results show that provision of long and short term loans was the dominant activity played by Fumble Umurenge SACCO followed by business counselling and education. Money transfer and insurance were the least provided services offered by Fumbwe Umurenge. The findings further show that government contribution to development of financial institutions was in form of security and financial support, supportive regulation, supervision and financial services promotion and communication.
The findings about relationship between financial institutions and poverty reduction show that the majority of respondents indicate promotion of savings culture is an important link between financial institutions and poverty reduction. The study concluded that long term and short term loans are the most accessed Microfinance products in Microfinance I situations while money transfers, business counselling and insurance are less accessed services. Government support to Microfinance institutions was in form of security followed by financial support and favourable regulation. There is relationship between Microfinance services and poverty alleviation since Microfinance institutions promote savings culture, promotions of business co-operatives and improvement of human capital.
Finally, the study recommended that more government support to Microfinance institutions is required in protecting people against high interest rates and other hidden charges. Modern management practices should be adopted by Microfinance institutions for customer satisfaction and more emphasis should be put on community sensitisation to overcome negative community perception.