Banking the Unbankables: Microfinance and Poverty Reduction in Rwanda: a Case Study of Urwego Opportunity Microfinance Bank

Since the 1990s, poverty reduction has taken priority at both national and international development levels. Within this framework, various initiatives have been taken. Microfinance has caught the attention of many aid donors, NGOs and Governments as an effective tool for poverty reduction. The successful use of microfinance is considered as victory for the poor to escape the poverty traps. In Rwandan context, this same initiative and hope has been emphasised in the Country’s Poverty Reduction strategy papers. Therefore this paper is an attempt to analyse the role of Microfinance in poverty reduction in Rwandan context. The study takes a case study of Urwego Opportunity Microfinance Bank which is one of largest microfinance institutions in terms of scale and geographical coverage. To achieve the desired objectives of the study 27 clients of the MFI selected from one rural and one urban branch were interviewed through individual and focus group discussions and the study was highly qualitative. There has been found that Microfinance outreach in scale is extensive and impacted positively on the poor but only the poor close to the poverty line could have been reached through MFI. Also rural- urban differences in impact have been noted which suggests differences in poverty levels, opportunities and Microfinance loan products appropriateness between the two.