Financial inclusion in the informal sector: A case study of street vendors in Kigali, Rwanda Nyarugenge District

The focus of this study was to understand the factors behind financial inclusion and exclusion in Rwanda especially among the small business in the informal sector by taking the case study of street vendors in Nyarugenge District. It was directed by the following three precise objectives: to evaluate whether street vendors are financially included or not and to what extent, to assess the relationship between socio economic characteristics of street vendors owners and their financial inclusion level and the availability of financial institutions in their villages. Finally, to find out why some street vendors are not financially included. The study used two methods (quantitative and qualitative) which support the researcher in describing and explaining the status of financial inclusion among street vendors. The research got randomly 100 respondents for providing information in a form of face to face questionnaire survey and a semi-structured interview with 3 key informants from financial institutions and one of a district officer in charge of financial affairs. While secondary data was collected through a desk review of relevant related documents by doing archives analysis. After collecting the needed information, the study proceeded to data analysis where quantitative data were analyzed using logit model, descriptive statistics, and cross-tabulation (MS Excel). The results of the study indicated that only 53% corresponding to the majority were account holders, while 47% do not have an account. Again, the results of the study showed that street vendors who live in the village with at least one financial institution are more likely to be financially included compared to street vendors living in the village with no financial institution. Also, the results indicated that males’ street vendors are more likely to hold accounts than females, but this is not statistically significant. The study also indicated that most of the street vendors had limited education, most of them attended only primary school education. Regarding statistics, participants replied that most of their beneficiaries are ranged between 20-30 years old. Furthermore, socio-economic characteristics of beneficiaries do not matter when looking at service delivered in the process of delivering financial services. Again, the study indicated that limited capital, lack of information, the high value of monthly transaction charges, financial illiteracy and other factors like lack of important credentials were limiting barriers to financial inclusion. The research paper recommends that all participants in financial inclusion should be focused on looking for how low limited capital business doers be favored in accessing, affording and using financial services to warrant the great development for all.