Strengthening Rural Women Entrepreneurs Through Microcredit in East African Countries: An Empirical Study from Rwanda

Abstract

In East African countries, most of financial institutions provided loans to its members to improve their businesses. Strengthening rural women through microcredit is one of the issues in Rwanda taking into consideration its huge contribution to socio-economic development. However, despite the several studies which have been done, the effect of microcredit on the strengthening of rural women entrepreneurs in Rwanda remains largely unknown. This study was carried out in Huye District, Rwanda to identify the challenges faced by rural women entrepreneurs, to examine the effect of microcredit on rural women entrepreneurs’ income and performance and to analyze the factors that influence rural women entrepreneurs ‘s decision to borrow from financial institutions. This study adopts a survey design and 182 Rural Women in Huye District were selected using a structure questionnaire. Propensity Score Matching Method was used to assess the effect of microcredit on rural women entrepreneurs’ income and performance and Tobit regression method was used to analyze the factors that influence rural women entrepreneurs’ decision to take loan from financial institutions. Results showed that the main challenges that rural women entrepreneurs faced in their businesses are lack of capital, lack of collateral to get loans from financial institutions, limitation of market access for their produces, lack of training and poor business skills and management. Results from Propensity Score Matching showed that rural women entrepreneurs who accessed microcredit have increased their income and improved their performance than rural women entrepreneurs who did not access microcredit from financial institutions. The study recommends that financial institutions and Government of Rwanda should put in place microcredit as a resilience policy for rural women entrepreneurs’ performance.