FINANCIAL LITERACY AND OVER-INDEBTEDNESS STATUS WITHIN SACCOs IN RWANDA
Authors:
BUMBALI Machiavel, (MBA),INGABIRE Aline, (MBA) & SIBOMANA Providence, (MBA, MA),
Abstract:
The study entitled financial literacy and over-indebtedness status within SACCOs in Rwanda was about assessing the impact of financial literacy on the over-indebtedness status of the members. The research was guided by the following objectives: firstly, to assess the level of financial literacy among SACCO members in the area under study, secondly to find out the extent to which financial literacy affects the over-indebtedness status among U-SACCO members for the period under study and thirdly to establish the relationship between financial literacy and over-indebtedness among SACCO members for the period under study. The researcher used qualitative and quantitative approaches as the study was descriptive. The total population was 698 members and staff. A sample of 87 members was selected using Solvin’s formula and stratified sampling procedure. The data collection techniques used to gather information were questionnaires and an interview guide to which a statistical software for data analysis SPSS was used for analyzing the data. The results of the study reveal that 17(19.5%) of the members were in the over-indebtedness status under the Financial distress, 70 (80.5%) were in the over-indebtedness status under Regular arrears. Findings also reveal that the number of members who do not know anything related to financial literacy at all was 2 (2.3%), those who had Financial knowledge were 16 (18.4%), 22 (25.3%) had Financial skills, 8 (9.2%) had Financial attitude, 16 (18.4%) had Financial behaviour and 23 (26.4%) had Financial awareness. The findings showed the members with a lack of financial literacy are exposed to fall in the over-indebtedness status as proved by SACCO from the responses they gave in the interview guide administered to them. The research highlighted a significant association in terms of the correlation coefficient computed and thus there is a significant association between financial literacy and the individual over-indebtedness status of the members in the area under study. The study concludes that the main variables that contribute significantly to the over-indebtedness status were financial literacy, education and the time spent working with SACCO. Finally, the study recommends that education and regular financial literacy should be implemented for better overcome of individual over-indebtedness status to the members.