Abstract: The researcher sought to determine the effects of digital credit services on the growth of Urwego Opportunity bank in Rwanda, to establish the effects of flexible lending services on the growth of Urwego Opportunity bank in Rwanda and to determine the contributions of specific course lending methods on the growth of Urwego Opportunity bank in Rwanda. The researcher used descriptive survey when conducting this study. The study focused on Urwego Opportunity Bank in Kigali city. Urwego Opportunity Bank MFI has eight branches in Rwanda. However, four of them operate within Kigali City. The researcher collected 89 clients and 11 employees. The researcher used cluster method to collect information from the clients whereas stratified sampling was used to collect information from the employees. The exercise was conducted in 2 days. Qualitative data was entered into appropriate analysis programme, preferably statistical package for social sciences (SPSS) from which analysis were done using proportions (percentages), rates and descriptive statistics. Descriptive statistics were used to estimate the mean and standard deviations of certain variables to ascertain how close or wider the sample statistics were spread from the mean. Qualitative data was entered into a compilation sheet whereby the information from various respondents were tabulated. Responses which showed similarities were given a theme. Each theme was transferred into one sheet from which final analysis was done in relation to objectives of this study. 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, 24hour 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: Innovative lending methods, growth of microfinance institutions.
Title: INNOVATIVE LENDING METHODS AND THE GROWTH OF MICROFINANCE INSTITUTIONS IN RWANDA: A CASE STUDY OF URWEGO OPPORTUNITY BANK
Author: Tumwesigye Dennis, Dr. Patrick Mulyungi
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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