Determining Contribution of Savings and Credit Groups on the Social Welfare Projects in Rural Rwanda. A Case of Umuzabibumwiza Organization, Musanze District

Abstract

The inadequate access to finance in Rwanda for the rural poor is one of the crucial problems faced despite the government’s efforts by prioritizing microfinance as a solution to financial access. Savings and credit groups have been introduced more than 10 years ago in Rwanda to promote access to finance and help poor people to meet their needs and improve household income.  Therefore, this study is mainly assessing the contribution of savings and credit groups (SCGs) on social welfare projects at Musanze Sector. Specific objectives are to find out the contribution of Savings in SCGs on social welfare projects at Musanze Sector; to assess the contribution of Credit facilitation in SCGs on social welfare projects at Musanze Sector, Musanze District, Rwanda; to analyze the contribution of emergency fund in SCGs on social welfare projects at Musanze Sector; and to evaluate the contribution of trainings in SCGs on social welfare projects at Musanze Sector. The research will combine exploratory, descriptive, explanatory and evaluative research design. The primary and secondary data are all sources of data; the study population is 360 members of Umuzabibumwiza organization from Musanze in Musanze Sector while sample size is 190 respondents selected using purposive sampling and simple random sampling techniques.  The data collection instruments are documentation, questionnaire, personal observation, focus group discussion, and interview. The researcher computed data using SPSS IBM version 23.0 to deal with statistical data.  The coefficient for Savings in SCGs (1.389) indicates that a unit increase in savings within SCGs corresponds to a statistically significant positive increase in Social welfare projects (p = 0.035). This implies that higher savings levels within these groups are associated with improved outcomes in social welfare initiatives, underlining the pivotal role that savings play in driving positive change. Emergency fund, with a coefficient of 1.839 (p = 0.021), highlights its substantial positive influence on Social welfare projects. This finding indicates that maintaining higher emergency funds within these groups is linked to enhanced social welfare project outcomes, reflecting the vital role of financial preparedness in addressing unforeseen challenges. While Credit facilitation in SCGs possesses a coefficient of 0.401 (p = 0.010), implying a weaker relationship with Social welfare projects, its contribution remains noteworthy. This indicates that while credit facilitation is a factor, its impact might be less pronounced compared to other predictors. Trainings in SCGs, with a coefficient of 1.224 (p = 0.015), also demonstrates a significant positive association with Social welfare projects. This signifies that conducting effective training programs within SCGs contributes positively to the success of social welfare projects, emphasizing the importance of skill development and knowledge enhancement. Umuzabibumwiza should strengthen the credit facilitation processes within SCGs. This can be achieved by establishing clear guidelines for loan disbursement and repayment, ensuring transparent record-keeping, and offering capacity-building programs to enhance members' business skills. Keywords: Savings, Credit Groups, Performance, Social Welfare, Projects