Role of Access to Finance for the Performance of Small and Medium Enterprises in Muhoza Sector, RwandaJean Bosco Harelimana*
Ruhengeri Institute of Higher Education, Musanze, Rwanda
- *Corresponding Author:
- Jean Bosco Harelimana
Ruhengeri Institute of Higher Education
E-mail: [email protected]
Received Date: December 29, 2016; Accepted Date: January 17, 2017; Published Date: January 22, 2017
Citation: Harelimana JB (2017) Role of Access to Finance for the Performance of Small and Medium Enterprises in Muhoza Sector, Rwanda. Bus Eco J 8: 279. doi: 10.4172/2151-6219.1000279
Copyright: © 2017 Harelimana JB. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Muhoza sector, Musanze District in Northern Province of Rwanda was taken under the study to analyze the role of access to finance for small and medium enterprises (SMEs) performance within a period from 2012-2015. The sample size of the study was 133 SMEs from the total population of 2128 SMEs. In order to achieve the objectives, this study employed a descriptive case study design and the data were collected using questionnaires and interview techniques. Data was analyzed using descriptive statistics and linear multiple regression analysis and then presented in statistical tables. The results show that the factor influencing access to external finance was Simple application procedures for loan with 84%. Also the results confirmed the role of access finance such as improve profitability (91%) improve firm efficiency (87%), prevent liquidity problems (72%), improve firm solvency (69%) and increase of assets quality (64%). Other role of access to finance by SMEs is to meet expenditures which accounted for 39 percent of the responses. The results confirm the hypothesis because the linear regressions are significant at p<0.05. The study conducted a multiple regression analysis from which means all the independent variables have a significant contribution to SMEs. There is therefore the need to design short courses in the area of financial management practices for entrepreneurs, particularly those with lower educational background as education is an important factor in accessing finance. Size of the firm was also found to be a significant factor affecting access to finance and therefore small firms should come together to form bigger firms in order to attract sources of finance. Banks and other financial providers should have a department solely devoted to the financing needs of SMEs and develop products purposely for SMEs which contribute to economic development of Rwandans society.