Abstract: This study seeks to assess the measures undertaken by MFI in Rwanda to increase their outreach in order to address such challenges of financial inclusivity in Rwanda. The study has objectives to assess the specific innovative approaches applied by MFIs for expanding the financial outreach, to establish the role of innovative micro-financing approaches on their MFI service delivery to the clients and determining the relationship between innovative financial approaches used in MFI and increased outreach. The study was carried out in Letshego, Muhanga branch whereby 100 respondents who consists of both clients and employees by using primary methods of data collection. Data from respondents were presented using descriptive statistics. The study found that that mobile phone applications are one of the main products used to reach out to more clients in MFI. Although MFI have tried to innovate ways of reaching out to clients, majority of the clients still have reservation for adopting the new changes. This was observed when the respondents were asked to state the maximum amount they can deposit using mobile banking and 62.8% stated that they are willing to part with any amount not more than 50,000 Rwandan francs. The study found that product innovation in MFI is very important in ensuring that they reach out to as many as possible clients. This is evident by the response rated at 36.4% of the respondents who supported it arguing that MFI should be in a position to introduce a new good or service to the market. Another important aspect is process innovation whereby a new production process or methodology should be effective and efficient. This was supported by 36.4% of the respondents who stated that process development is equally important as the product development. The study indicates that in average there are similarities between the outcome of the employees who believe that innovative ways of reaching out to customers are effective and efficient, withdrawal and deposit in Letshego Microfinance due to its innovative products as indicated, easy ways to check balance in their accounts, easier ways of opening an account, quick access to MFI services, error free records innovative services, 24 hours online services, security of innovative products and time saving. The study recommends that there is a need to put much attention into the technological innovation, infrastructure building, institutional development, and human capital formation which directly increase the productivity and human resources. There is also a need to ensure an appropriate regulatory and prudential framework for the market of Microfinance including capital adequacy ratios, asset quality indicators and unsecured loan limits. It is important to provide a specialized credit bureau for Microfinance that can help financial institutions to have necessary information on clients in order to minimize risks.
Keywords: Microfinance Approaches, Financial Outreach, Innovative services, financial institutions and product development.
Title: Effect of Innovative Microfinancing Approaches On Financial Outreach, Case Study: Letshego Rwanda Ltd,
Author: Augustin Kanyarwanda, Dr. Tobias Olweny, Dr. Mbera R. Zénon
International Journal of Thesis Projects and Dissertations (IJTPD)
Research publish journals
