DECLARATION

I, UWIMANA RUBANGURA Immacule, hereby declare that this dissertation entitled The Role of credit and saving cooperatives in increasing of investment in Rwanda is my own work and it has not been submitted anywhere for the award of any degree.

Signature: UWIMANA RUBANGURA Immaculee Date:

DEDICATION
To almighty God To my beloved family To my late father and mother To my friends, relatives and colleagues To everyone who supported me during my studies I dedicate this work. My God reward you all substantially

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ACKNOWLEDGMENT
First and foremost, I would like to thank God for this endurance and protection during my educational period and all my life. The successful completion of this work is also a result of the contribution of many people. I therefore acknowledge all those who in one way or another assisted me throughout my educational period. My special thanks go to my almighty God and my family for their support throughout my final year and for their incessant care and encouragement. I deeply thank my lovely husband KANAMUGIRE Bernard, my two daughters GIRA Iska and GIRA Issra, my sister CARTAS, my friends KANEZA Esperance and Claire UWINEZA f o r their encouragement, support and their valuable contribution to my work. I would like to recognize the invaluable support from my project Supervisor Jean Bosco SHEMA.

I would like to extend my special thanks to the administration of National University of Rwanda for their effort in making me open to the knowledge, skills, education together with financial support throughout university level. I also wish to extend my sincere gratitude to my friends and classmates for their valuable friendships and co-operation. Lastly, I thank all those who contributed to my academic success who are not mentioned in this acknowledgement. Your contribution is valuable. May God bless you all!

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LIST OF FIGURES
FIGURE N Figure 4.1. Figure 4.2. Figure 4.3. Figure 4.4. Figure 4.5. Figure 4.6. Figure 4.7. Figure 4.8. Figure 4.9. Figure 4.10. Figure 4.11. Purpose of working in cooperatives Figure 4.12. Figure 4.13. Figure 4.14. Figure4.15. Effect of credit and saving cooperatives on investment Level of poverty headcount ratio by investment dvpt Profit generated by investment Problem encountered with saving and credit cooperatives FIGURE NAME
Organization structure of RIM S.A

Customer sex Customers age group Type of saving before joining a bank Form of saving Purpose of saving Do you keep records of economic activities When do you save? Motif of saving Types of cooperative assisting in

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LIST OF TABLES

FIGURE N Table4.1. Table 4.2. Table4.3. Table 4.4. Table 4.5. Table 4.6. Table 4.7. Table 4.8. Table 4.9. Table 4.10. Table 4.11. Customer sex Customer age

FIGURE NAME

Type of saving before joining a bank form of saving Purpose of saving Do you keep records of your economic activities When do you save Motif of saving Types of cooperatives assisting in Purpose of working in cooperatives Effect of credit and saving cooperatives on investment

Table 4.12.

Level of poverty headcount ratio by investment dvpt

Table 4.13.

Do your investment generate profit

Table 4.14.

Did you encounter any problem with saving and credit cooperatives?

ACRONYMS
MDGs: Millennium development goals COOPECs: Savings and Credit Cooperatives NGOs: Non government organizations RMF: Rwanda Microfinance Forum MFIs: Micro finance industry BNR: National Bank of Rwanda RIM: Rseau interdiocsain de micro finance SA: Socit Anonyme (Limited Company = Ltd co.)
FDIC: Federal Deposit Insurance Corporation

FDI: Foreign direct investment ASSOFI: Association de solidarit Financire (Financial association for joint and several Liabilities or Group loans)

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ABSTRACT
Since economic transition started, a close relationship has developed between saving and credit cooperatives and investment. It has nevertheless been an unequal relationship: while saving and credit cooperatives have undoubtedly contributed to the investment inflows, in Rwanda, increase of investment has been the increment form of microfinance. Increase of investment seems to have made a positive contribution to the improvement of efficiency and corporate governance in the framework of economic transition. These findings are particularly important in the light of the expectations that, in the near future, saving and credit cooperatives remain the mainstay for an important part of the potential investment inflows of several (but not all). Policy makers in Rwanda seem to recognize that not only is microfinance important, but also the way it is carried out matters, as restructuring and the establishment of strong corporate governance may be more important than the disposal of former State-owned assets. A strong presence of owned firms allows a fast restructuring, on condition that, at the same time, host Governments follow sound, efficiency-oriented and competitive economic policies. The impact of saving and credit cooperatives-related increase of investment depends largely on the follow-up investments and on the restructuring efforts of the new owner. The role of government policies in the future can be seen in maximizing the positive effects and stimulating spillovers to the rest of the economy.

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CHAPTER ONE
1.0. Introduction 1.1. Background to the study The concept of microfinance is not new. Savings and credit groups that have operated for centuries include the "susus" of Ghana, "chit funds" in India, "tandas" in Mexico, "arisan" in Indonesia, "cheetu" in Sri Lanka, "tontines" in West Africa, and "pasanaku" in Bolivia, as well as numerous savings clubs and burial societies found all over the world. Formal credit and savings institutions for the poor have also been around for decades, providing customers who were traditionally neglected by commercial banks a way to obtain financial services through cooperatives and development finance institutions. One of the earlier and longer-lived micro credit organizations providing small loans to rural poor with no collateral was the Irish Loan Fund system, (Jonathan Swift, [1700:14]). In the 1800s, various types of larger and more formal savings and credit institutions began to emerge in Europe, organized primarily among the rural and urban poor. These institutions were known as People's Banks, Credit Unions, and Savings and Credit Co-operatives. Also this concept of the credit union was developed. Their altruistic action was motivated by concern to assist the rural population to break out of their dependence on moneylenders and to improve their welfare. From 1870, the unions expanded rapidly over a large sector of the Rhine Province and other regions of the German States. The cooperative movement quickly spread to other countries in Europe and North America, and eventually, supported by the cooperative movement in developed countries and donors, also to developing countries (Friedrich Wilhelm Raiffeisen, [1870:34]). In the early 1900s, various adaptations of these models began to appear in parts of rural Latin America. While the goal of such rural finance interventions was usually defined in terms of modernizing the agricultural sector, they usually had two specific objectives: increased commercialization of the rural sector, by mobilizing "idle" savings and increasing investment through credit, and reducing oppressive feudal relations that were enforced through indebtedness. In most cases, these new banks for the poor were not owned by the poor
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themselves, as they had been in Europe, but by government agencies or private banks. Over the years, these institutions became inefficient and at times, abusive. The 1990s saw growing enthusiasm for promoting microfinance as a strategy for poverty alleviation. The microfinance sector blossomed in many countries, leading to multiple financial services firms serving the needs of micro entrepreneurs and poor households. These gains, however, tended to concentrate in urban and densely populated rural areas (Anita Campion and John Owens, Sustainable Approach to Rural Microfinance, Micro banking 2003). It was not until the mid-1990s that the term "microcredit" began to be replaced by a new term that included not only credit, but also savings and other financial services. "Microfinance" emerged as the term of choice to refer to a range of financial services to the poor, that included not only credit, but also savings and other services such as insurance and money transfers. Today, practitioners and donors are increasingly focusing on expanded financial services to the poor in frontier markets and on the integration of microfinance in financial systems development. The recent introduction by some donors of the financial systems approach in microfinance which emphasizes favorable policy environment and institution-building has improved the overall effectiveness of microfinance interventions (International Trade Forum, Issue [2002: 30]). Today, the microfinance industry and the greater development community share the view that permanent poverty reduction requires addressing the multiple dimensions of poverty. For the international community, this means reaching specific Millennium Development Goals (MDGs) in education, women's empowerment, and health, among others. For microfinance, this means viewing microfinance as an essential element in any country's financial system (Pearce & Douglas, 2003). Since 1994, the micro finance industry has been characterized by a fast revolution resulting from NGOs interventions here in Rwanda, Government funded projects in collaboration with donors and churches during the post conflict periods. The influx of Savings and Credit Cooperatives (COOPECs) and Limited Companies was essentially triggered by the BNR instruction of 2001, which obliged micro finance practitioners, regardless of form, to restructure according to statutory texts. The micro finance industry currently counts 223 formally registered MFIs (including cooperatives). The Rwanda Microfinance Forum (RMF) was created in 2000 to serve

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as an umbrella organization of MFIs in the country. (Micro Save-Africa and Equity Building Society in Kenya, 2003). 1.2. Statement of the Problem According to the World Bank (1991), the level of domestic savings and investment is inadequate to fuel the growth needed to raise living standards and generate sufficient productive employment. The Bank notes that the major share of the additional savings and investment required must come from private sources. (Yaw Asante, determinants of private investments behavior, [2000:1]). Besides, according to the Republic of Rwanda, Ministry of Finance and Economic planning, statistics Department Report on integrated households living conditions survey(20002001:10),60% of the Rwandan population live on less than one dollar a day! With this kind of situation, saving and domestic investment are rendered impossible.

With this ministry report; Microfinance (saving and credit) cooperatives do witness an ever constant search for efficiency and competitive advantage. Consequently they must rely on various factors of which increasing investment is essential. By mobilizing and interesting people to save their money into the bank account and to interest them to plan for the future in preparing good projects which will be presented for requesting loan, short term loan, and long term loan to invest in, which will at the end increase their financial income. Saving and credit cooperatives have an important impact to various users in the area of deciding and increasing where to invest.

All the above raised concerns to justify the need to consider saving and Credit cooperatives and to reconsider and improve them whenever necessary. Yet, remaining is an outstanding need to know whether saving and Credit cooperatives can incontestably help to increase investment effectively. This constitutes a basis on which an interest is aroused in the researchers mind to find out how saving and Credit cooperatives can increase investment here in Rwanda.

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1.3. Objectives of the study 1.3.1. General objective The general objective is to find out how saving and credit cooperatives can support to increase investment effectively and efficiently in Rwandas citizens. 1.3.2. Specific objectives The specific objectives are: 1. 2. 3. 4. To describe saving and credit cooperatives in Rwandan context. To establish the information on investment in Rwanda. To establish how RIM influences investment in Rwanda. To make necessary recommendations.

1.4. Research Questions The study was carried out to find answer for the following questions: 1. 2. 3. 4. How do different scholars describe saving and credit and investment? What do we understand investment in Rwanda context? How does RIM influence investment in Rwanda? What are the recommendations for necessary improvements to be made?

1.5. Hypothesis The study seeks to verify the following hypothesis: (i) Null hypothesis (HO): Saving and credit is not a basis to increase investment in cooperatives. (ii) Alternative hypothesis (H1): Saving and credit is a basis to increase investment in cooperatives. 1.6. Significance of the study It has been mentioned that saving and credit cooperatives, microfinance enterprises included, are witnessing an ever constant search for efficiency and competitive advantages. This requires, among others, to have saving and credit services to increase investment. By means of sounds and constructive recommendations grounded on its findings, this study will help pave the way through which microfinance enterprises in general and RIM in particular, can go so as to achieve, to a certain extent, the desired competitive level. In addition, the findings of this study
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are intended to add new knowledge to the existing literature in investment field and thereby be helpful to the cooperatives saving and credit givers and beneficiaries Rwandan citizens as investors, academicians as well as other research students and it can also contribute to the increase of Rwanda economy. 1.7. Scope and Delimitation of the study The study analyses the link between microfinance cooperatives and Investment in Rwanda and covers the period of 2000 to 2010. The period starts in 2000 and is sufficiently long and allows comparison with other studies. The researcher conducts a case study research on RIM Cooperative. In addition, saving and credit is mainly intended to serve as a tool to the users who lack the information to prescribe and decide where to invest, this study focus on the internal saving and credit. 1.8. Theoretical and Conceptual Framework Each and every scientific work has specific concepts and leading theories, According to Durkheim E. (1968:34), la premire dmarche doit donc tre de dfinir les choses dont on traite afin que lon sache et quon sache bien de quoi on est question. Thats why, in this part of my work, key concepts will be defined. Under this heading there are concepts and theories discussed to contribute to a clear understanding about how saving and credit impacts investment. This will presents the concepts and related theories on the research topic under study, in order to get clear views of the impact of saving and credit on investment cohesion.

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CHAPTER TWO

LITERATURE REVIEW 2.0. INTRODUCTION In this chapter, an attempt is made to review what various scholars wrote about the topic under research. It is subdivided into four sections. Section one deal with review of theories; section two will made criticism of the theories; Section three has to do with the empirical review and section four will talk about knowledge gap. 2.1. Review of Theories This section provides the meaning of key concepts related to the research topic. To make those concepts meaningful, related sub-concepts are also explained. 2.1.1. Saving According to F. Modigliani, "The Role of Intergenerational Transfers and the Life-cycle saving in the Accumulation of Wealth", Journal of Economic Perspectives, (n. 2, 1988), saving is income not spent, or deferred consumption. Methods of saving include putting money aside in a bank or pension plan. Saving also includes reducing expenditures, such as recurring costs. In terms of personal finance, saving specifies low-risk preservation of money, as in a deposit account, versus investment, wherein risk is higher. There is some disagreement about what counts as saving. For example, the part of a person's income that is spent on mortgage loan repayments is not spent on present consumption and is therefore saving by the above definition, even though people do not always think of repaying a loan as saving. "Saving" differs from "savings." The former refers to an increase in one's assets, an increase in net worth, whereas the latter refers to one part of one's assets, usually deposits in savings accounts, or to all of one's assets. Saving refers to an activity occurring over time, a flow variable, whereas savings refers to something that exists at any one time, a stock variable. Saving is closely related to investment. By not using income to buy consumer goods and services, it is possible for resources to instead be invested by being used to produce fixed capital,
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such as factories and machinery. Saving can therefore be vital to increase the amount of fixed capital available, which contributes to economic growth. However, increased saving does not always correspond to increased investment. If savings are stashed in a mattress or otherwise not deposited into a financial intermediary like a bank there is no chance for those savings to be recycled as investment by business. This means that saving may increase without increasing investment, possibly causing a short-fall of demand (a pile-up of inventories, a cut-back of production, employment, and income, and thus a recession) rather than to economic growth. In the short term, if saving falls below investment, it can lead to a growth of aggregate demand and an economic boom. In the long term if saving falls below investment it eventually reduces investment and detracts from future growth. Future growth is made possible by foregoing present consumption to increase investment. However savings kept in a mattress amount to an (interest-free) loan to the government or central bank, which can recycle this loan. 2.1.2. Saving in personal finance According to G. DELL MORE (1983:33), within personal finance, the act of saving corresponds to nominal preservation of money for future use. A deposit account paying interest is typically used to hold money for future needs, i.e. an emergency fund, to make a capital purchase (car, house, vacation, etc.) or to give to someone else (children, tax bill etc.). Within personal finance, money used to purchase shares, put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. This distinction is important as the investment risk can cause a capital loss when an investment is realized, unlike cash saving(s). Cash savings accounts are considered to have minimal risk. As an example in the United States, all banks are required to have deposit insurance, typically issued by the Federal Deposit Insurance Corporation or FDIC. In extreme cases, a bank failure can cause deposits to be lost as it happened at the start of the Great Depression. However, since the FDIC was created, no deposits in the United States have been lost due to a bank failure. In many instances the terms saving and investment are used interchangeably. For example many deposit accounts are labeled as investment accounts by banks for marketing purposes. To help establish whether an asset is saving(s) or an investment you should ask yourself, "Where is my
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money invested?" If the answer is cash then it is savings, if it is a type of asset which can fluctuate in nominal value then it is investment. 2.1.3. Interest Classical economics posited that interest rates would adjust to equate saving and investment, avoiding a pile-up of inventories (general overproduction). A rise in saving would cause a fall in interest rates, stimulating investment. But KEYNES argued that neither saving nor investment were very responsive to interest rates (i.e., that both were interest inelastic) so that large interest rate changes were needed. Further, it was the demand for and supplies of stocks of money that determined interest rates in the short run. Thus, saving could exceed investment for significant amounts of time, causing a general glut and a recession. 2.1.4. Credit (loan) According to http://www.investorwords.com/1193/credit.html; A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date. When a consumer purchases something using a credit card, they are buying on credit (receiving the item at that time, and paying back the credit card company month by month). Any time when an individual finances something with a loan (such as an automobile or a house), they are using credit in that situation as well, The borrowing capacity of an individual or company. A journal entry recording an increase in assets. With cash basis accounting, credits are recorded when income is received. With accrual basis accounting, credits are recorded and recognized when income is earned. Compare to Debit. According to INGHAM, G. (2004:12-19); Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead arranges either to repay or return those resources (or other materials of equal value) at a later date. The resources provided may be financial (e.g. granting a loan), or they may consist of goods or services (e.g. consumer credit). Credit encompasses any form of deferred payment. Credit is extended by a creditor, also known as a lender, to a debtor, also known as a borrower.

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Credit does not necessarily require money. The credit concept can be applied in barter economies as well, based on the direct exchange of goods and services INGHAM (2004 p.12-19). However, in modern societies credit is usually denominated by a unit of account. Unlike money, credit itself cannot act as a unit of account. Movements of financial capital are normally dependent on either credit or equity transfers. Credit is in turn dependent on the reputation or creditworthiness of the entity which takes responsibility for the funds. Credit is also traded in financial markets. The purest form is the credit default swap market, which is essentially a traded market in credit insurance. A credit default swap represents the price at which two parties exchange this risk the protection "seller" takes the risk of default of the credit in return for a payment, commonly denoted in basis points (one basis point is 1/100 of a percent) of the notional amount to be referenced, while the protection "buyer" pays this premium and in the case of default of the underlying (a loan, bond or other receivable), delivers this receivable to the protection seller and receives from the seller the par amount (that is, is made whole). Credit, in commerce and finance, term used to denote transactions involving the transfer of money or other property on promise of repayment, usually at a fixed future date. The transferor thereby becomes a creditor, and the transfer, a debtor; hence credit and debt are simply terms describing the same operation viewed from opposite standpoints. 2.1.4. Investment Investing is the proactive use of your money to make more money or, to say it another way, it is your money working for you. Investing is different from saving. Saving is a passive activity, even though it uses the same principle of compounding. Saving is more focused on safety of principal (the amount you start out with) and less concerned with return. Your focus in investing is on return and can run the spectrum from conservative to very aggressive in terms of risk. One way you measure results is by the expected return weighed against the anticipated risks.

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Charles W.L.HILL (2003:25) defines investment as commitment of funds for a period of time to derive future flow of funds that will compensate the investing unit for the time funds are committed, for the expected rate of inflation, and also for the uncertainty involved in future flow of funds. GEORGE W.DOWRIE and DOUGLAS R.FULLER (1948:4) defined investment as the use or employment of capital with the aim of producing a gain in the shape of income or appreciation in value or both. 2.1.5. Direct Investment According to PETER J.BUCKLEY and BRIAN R.ROBERT (1982:3) state that Foreign Direct Investment occurs when an investor purchase the power to exert some kind of control over the management of the investment .It therefore implies that something other than capital alone is involved .It can be in terms such as managerial and technical capability or marketing

knowledge. Direct Investment involves the movement of factors other than capital. Foreign investment means that there is a difference between the assets owned by the residents of a country and the capital stock, located in the country. There are defined and these in per capital terms. 2.1.6. Foreign Direct Investment According to SOUTH CENTRE (1997:5), foreign direct investment occurs when an investor based in on one country (home country) acquires an asset in another country (the host country) with intent to manage that asset. According to A.J.EASSON (1990:45), foreign Direct Investment is the term used to describe the process by which private business enterprises purchase capital assets, transfer capital, or reinvest profit into economy of another country. PETER J.BUCKLEY and BRAIN R.ROBERT (1982; 39) state that foreign Direct Investment occurs where an enterprise migrates and start a firm in his new homeland, financed by capital from his old homeland .Management control is not exercised from the source country and such investment soon become indigenous to host country and the importance of this form of investment is in areas of new settlement.

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According to UNACTAD (1998; 6) Foreign Direct Investment is defined as an investment involving a long-term relationship and reflecting a lasting interest of and control by an entity resident in one economy in an enterprise other than that of foreign direct investor. Foreign Direct Investment flows are thus usually entails transfer of technology, skills, organization and managerial resources, access to markets and so forth. According to ROBERT GROSSE and DUANE KUJAWA (1992; 92), Foreign Direct Investment involves ownership and control of a company in a foreign country. In exchange for ownership, the investing company usually transfers some of its financial, managerial, technical, trademark and other resources to the foreign country. ROBERT GROSSE and DUANE KUJAWA (1992:93) further go on to make a distinction between the two types of investment, namely: Foreign Direct Investment and Portfolio Investment. Unlike Foreign Direct Investment, in the Portfolio Investment, the firm buys stock, bond and other financial assets to hold in its portfolio. It relates mainly to the firms holdings of marketable securities, while Foreign Direct Investment relates to the purchase and management of the plant and equipment. The conceptual distinction Direct and Portfolio Investment is that the former requires control by the investor, whereas the latter is passive and requires no management effort by the investor. In the words of Charles W.L.HILL (2002:192), Foreign Direct Investment occurs when a firm in facilities to produce and market in a foreign country. What is the FDI and why is it important for developing countries?

To explain the difference in the FDI performance among countries, it is necessary to understand how foreign investors choose their investment locations. The FDI usually goes to the countries where it is possible to combine the ownership advantages with the location-specific advantages of the host countries through internationalization advantages of foreign investments (UNCTAD 1998; P.3) we will focus on the specific advantages of the host countries. The host country determinants of the FDI may be broadly grouped into three categories: policy framework for the FDI, economic conditions, and business facilitations.

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In an economic sense, direct investments depend on different aspects of investments: the motive for investment (market-seeking, resource-seeking, and efficiency-seeking), type of investment (Greenfield or Brownfield), the sector of investment (manufacturing or services), and the size of multinational company or investor. However, one must also include location specific factors,

which are more stable over the period.

According to the above mentioned, the principal economic determinants of the FDI in a specific case could be different. The market-seeking FDI aims at penetrating the local markets of host countries and is usually connected with market size and per capita income, market growth, access to regional and global markets, consumer preferences and structure of domestic market. The resource-asset seeking FDI depends on prices of raw materials, lower unit labor cost of unskilled labor force, and the pool of skilled labor, physical infrastructure (ports, roads, power, and telecommunication), and the level of technology. The efficiency-seeking FDI is motivated by creating new sources of competitiveness for firms and it goes where the costs of production are lower. In this last case, prior to decision, foreign investors consider prices of factors of production (adjusted for productivity differences) and the membership in regional integration agreement (UNCTAD 1998). Consequently, the efficiency seeking FDI covers both previously mentioned types of the FDI. It is necessary to stress that it is not possible to distinguish exactly between firm-specific and country-specific determinants of the FDI, or to determine motives of small versus large foreign affiliates.

CASSON (1990:18) emphasized that the theory of the FDI represents an intersection of three theories: the theory of international capital markets, which defines the financing and risk-sharing arrangements; the theory of the firm, which describes the location advantages, management and input utilization; and the trade theory, which explains the motives for sales in the world economy. Each theory provides different insights on the FDI flows. The determinants of the FDI are taken from those three theories. FDI represents an important source of finance for developing countries and transition countries but unfortunately most of the FDI inflows and outflows are concentrated within the developed countries.

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In economic literature, there are differences between the FDI inflows to the developed countries and those to the less-developed countries (MARKUSEN et AL. 1996, CARR et AL. 1998). Available data indicates that the inward and outward FDI shift jointly across time and across countries (Lipsey 2000).

The FDI inflows to less-developed countries are associated with vertical investments. The vertical FDI takes place when a firm relocates only a part of its production process but not the whole production. In many cases, it is the relocation of the labor-intensive activities in low-wage countries. This process tends to reduce the labor intensity of the home country domestic production (Mariotti et al. 2003). Vertical FDI are usually driven by differences in factor endowments and prices of the factors of production between home and host countries. Foreign

investors are motivated by the differences of factors of production, like inexpensive labor, natural resources, specific skills, and infrastructure. The FDI inflows to developed countries are usually horizontal investments driven by market-seeking strategies and they tend to increase the labor intensity of the home country domestic production (Mariotti et al. 2003). Therefore, horizontal investments replicate the complete production process of the home country in a foreign country. The horizontal FDI seeks to take advantages of a new large market, which is considered as traditional motive for the FDI. In recent years, the determinants of and motivation for the FDI in developing countries have changed in the process of globalization. The FDI is considered responsible for welfare increase in the host country due to advantages related to the introduction of new technologies and innovation, new managerial techniques, development of additional skills (Caves 1974, Perez 1997), increased capital, job creation and improvement of working conditions, and the development of the industrial sector in the host country (Haddad and Harrison 1993, Markusen and Venables 1999). Due to these facts, it can easily be understood why so many developing countries seek new ways to increase FDI inflows. In order to design appropriate economic policies to attract FDI, one must first find out what motivates the investors to seek other markets in other words, what are the key determinants of the FDI. Because the FDI is a rather complex economic category which depend on many factors whose relative importance changes as the economic environment evolves over time, it is possible that because the economy of the host country changes as well as the international environment evolves the FDI factors also change (UNCTAD 1998).
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Even though traditional determinants and the types of the FDI associated with them have not disappeared with globalization, their importance is declining. For example, one of the most important traditional FDI determinants, the market size, has decreased in importance, while at the same time some new determinants became prominent. Cost differences between locations, the quality of infrastructure, the easiness of doing business, and the availability of skills have increased in importance (UNCTAD 1996). This reveals that the investors motives are changing, and consequently countries must seek new ways to attract FDI. FDI refers to investment made to acquire lasting interest in enterprises operating outside of the economy of the investor .Further, in cases of FD I; the investors purpose is to gain an effective voice in the management of the enterprise.

2.1.7. Components of Investment Equity capital: is the foreign direct investors purchase of shares of an enterprise in a country other than its own. Reinvesting earnings: It comprise the direct investors share (in proportion to direct equity participation) of earnings not distributed as dividends by affiliates ,or earnings not remitted to the direct investor .Such retained profits by affiliates are reinvested. Intra-company loans or intercompany debt transactions: refer to short or long-term borrowing and lending of funds between direct investors (parent enterprises) and affiliate enterprises. 2.2. Criticism 2.2.1. Theories of foreign direct investment (FDI) According to economic theory, FDI towards developing Countries flows for labor-intensive and low-technology production, while towards developed states; it flows for high-technology production. Identification of determining Factors of FDI is a complex problem which depends on several characteristics Specific for each country, sectors, and companies. All those factors could be grouped in three broad categories: economic policy of host country, economic performance, and attractiveness of national economy. On the desegregated level, FDI depends on Size and growth potential of a national economy, natural resources endowments and Quality of workforce,

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openness to international trade and access to international Markets and quality of physical, financial, and technological infrastructure It has been argued in the literature (BOSWORTH and COLLINS 1999) that the ability to attract international capital can offer large potential benefits for developing countries. First of all, foreign capital can be used to augment domestic savings (which is usually at a low level) and thus enable countries to increase the rates of capital accumulation. Consequently, this should improve longer-term growth prospects and increase wealth of the population, in other words, speed the development process. Access to the international capital market provides the means to finance increased needs for resources in developing countries. Not only is the fresh capital relevant, so are other, more intangible assets as well. Some types of foreign capital inflows, principally foreign direct investment, facilitate the transfer of managerial and technological know-how. A relevant model developed by MONGE-NARANJO (2002:123) proposes that in the short-run FDI reduces the productivity and increases the dispersion of efficiency of domestic firms but in the long run domestic firms catch up with firms in the developed world. According to CHARLES W.L.HILL (2002:200), there are several theories of Foreign Direct Investment. These theories approach the phenomenon of Foreign Direct Investment from three complementary perspectives; one set of theories seeks to explain why a firm will favour direct investment as a means of entering a foreign market when two other alternatives are possible, exporting and licensing. Another set of theories seeks to explain why firms in same industry often undertake Foreign Direct Investment at same time ,and why certain locations are favored over other as targets for Foreign Direct Investment .The third theoretical perspective known as Eclectics Paradigm attempts to join two other perspectives into a single holistic explanation. 2.3. Empirical Review This part reviews the observation on the theories of different scholars on the topic under research. 2.3.1. Characteristics of investment It is easy to slip into an unnecessarily complex discussion about whether a particular financial transaction was an investment or a savings deposit. However, it is important to understand that

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investing has some distinctive characteristics, which separate it from pure savings. Since we are discussing stocks, I will limit the characteristics to that type of investment:

Ownership Upside Potential Risk

Each of these characteristics sets investing in stocks apart from savings in several different ways. 2.3.2. Ownership When you buy stock, you are buying a piece of a company, you become a part owner. This ownership gives you certain rights, including voting on important matters before the company and participating in the profits if the company distributes dividends. Virtually no savings instruments give you ownership. You may own a bank CD, but you dont own part of the bank. You may own a U.S. Treasury bond, but you dont own the government. 2.3.3. Upside Potential When you own stock, you participate in the growth of the company. As the value of the company increases, so does you investment. If profits increase, you may receive bigger dividend checks. The stock price may continue to rise for a long period. Many of the early employees of Microsoft are millionaires because their stock has gone up dramatically. If you have a bank CD that pays 3%, it is unlikely the banks president is going to call you one day and say, we have had a great year, so Im raising your interest rate to 6%. 2.3.4. Risk Along with the potential for extraordinary gain is the potential for loss. These two go hand in hand. You can lose money investing in stocks. If the thought of losing money makes your stomach knot up, stick to savings instruments. However, you should know that even the safest savings instrument carries unseen risks. Most savings instruments trade security for return, meaning they pay very little. When you factor in

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inflation and taxes, many so called safe savings instruments return almost nothing and some can actually lose ground. 2.4. Knowledge Gap In a free market economy, savings are automatically matched with investment. Decisions about saving and investment in capital processes are often made by different actors. Investment decisions are made by entrepreneurs and businesses, whereas savings decisions are often made by people and households. The link between these independent actors is the interest rate. When interest rates rise, people will save more. When interest rates fall, more potential projects become economic. So, businesses and entrepreneurs invest more. In a free market, interest rates rise and fall to clear the market and ensure that savings are matched by equivalent investments. Banks often act as intermediaries between savers and producers. Savers deposit their spare wealth with the bank and receive interest. Producers borrow from the bank to purchase capital goods to increase the productive capacity of their business. Their increased productivity improves living standards for everyone. This all goes wrong when governments give their central banks authority to set interest rates. A central banker does not know the future, so he does not know have enough information to set the interest rate. Following the dotcom crash in 2000, central banks pushed interest rates down, leading to the housing boom and following credit crunch (www.dotcom crash 2000).

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CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3.0. Introduction
As many scientists use different methods and techniques while conducting their research, we can say that, there is no research that can be done without some specific methods and related techniques on which the research can make reference. The following chapter underscores the methods and techniques used to conduct this research. Methodology is defined as a set of methods and techniques that a researcher can use when he/she is conducting a scientific research. 3.1. Research plan A research design is a master plan specifying methods and procedures for collecting and analyzing the required information. It is a framework of the research plans of action. For the purpose of collecting enough data a combination of descriptive and analytical research techniques based on results from primary and secondary data was used. Descriptive for identifying percentages of benefits from use of credit and saving cooperatives and with analytical research was used to determine whether there is a relationship between the two variables i.e credit and saving and increasing investment. Kenneth D. Bailey (1978, p. 37), a case study is an extensive examination of a simple instance of a phenomena of interest and is an example of a phenomenological methodology. Thus, as this study methodology is descriptive and phenomenological in nature, the researcher applied a case study approach and thereby RIM was selected for better results to be achieved. The reason for case study approach includes; time constraints, limited resources and representatively due to its missions and principles. 3.1.1. Data sources This is nothing else rather than both primary and secondary data respectively.

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3.1.2. Primary data According to Gilbert A. Churchill, Jr. (1992, p. 182), primary data refers to the information collected specifically for the purpose of the investigation at hand. Thus, this data was obtained from sampled employees of RIM through self administrative questionnaire. 3.1.3. Secondary data Gilbert A. Churchill, Jr. (1992, p. 182), asserts, secondary data is the information not gathered for the immediate study at hand but for some other purposes. A. Churchill advice researcher on secondary data as it saves time and money. Hence the main library of the National University of Rwanda, library of different faculties, RIM documents, and electronic data was the main concern of the researcher for secondary data. 3.3. Target Population Target population refers to the total group from whom the information is needed, Carl et al (1991; 428). The total population of RIM is all employees who are in charge of credit (credit agent) and those are in charge of credit recovering and also big clients who are using loan in the period of five years. 3.3. Description of Research Instruments This study used random sampling technique. Random sampling is where a sample is selected at random from the whole population. Kakoza (1996:23). Under this technique, all members of all management level had equal chances of being selected and because of the size of the population the researcher selected the respondents using this type of technique. It is at management levels that the sub samples were selected until the required sample was obtained. This method was used to select the right people who could provide full information regarding on how decisions are done. The required information from them was collected through questionnaires, observation and interviews. 3.4. Description of sample The sampled populations were staffs from RIM and respondents were taken from management level. A sample of 10 respondents within these, 5 is big customers based at HUYE branch under TWUNGANIRANE whose clients are grouped in ASSOFIs

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And others are employees of RIM who were in charge of credit and recovering were used to represent the whole population of the RIM. 3.4.1. Sampling technique This study used Purposive sampling technique. Purposive sampling is the one in which the person who is selecting the sample is who tries to make the sample representative, depending on his opinion or purpose, thus being the representation subjective. Under this technique, all members of all management level had equal chances of being selected and because of the size of the population the researcher selected the respondents using this type of technique. It is at management levels that the sub samples were selected until the required sample was obtained. This method was used to select the right people who could provide full information regarding on how investment are done. The required information from them was collected through questionnaires and interviews. 3.5. Description of Data collection procedures 3.5.1. Documentation Documentation is one of the techniques that are used when conducting a research. It is a process of searching in books or other publications from various institutions and using internet to find data that are supposed to be useful for the subject under the study. The researcher consults so many books, articles, annual reports for decision support system, and sites related to the subject where this process gives the opportunity to know in large management information system quality and maintainability. (OLeary, z., 2004.The essential guide to doing research. Sage publication) 3.5.2. Questionnaires According to Grinnel et al (1990: p, 228), a questionnaire is a set of written questions, which calls for responses on the part of the client, and may be either self-administered or groupadministered. For the case of this study, self-administered questionnaires were used. The questionnaires were designed and pre-tested before submission to the selected respondents. The method of questionnaire was preferred because it reached a wider coverage.

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3.5.3. Interview According to Kenneth D.Bailey (1978:116), an interview schedule is a special case of social interaction between two persons and is a subject to some of the rules and restrictions as other instances of social interactions. Interviews are a method of collecting data in which selected participants are asked questions in order to find out what they do, think or feel. Depending on the nature of the research study, interviews were used where by questions were written on the paper and read for interviewees based on the sequence of the questions. The questions asked were both open ended and closed ended questions. 3.6. Description of Data analysis procedures To make the collected data to be more understandable we transformed the collected data into ways that made them easy for interpretation. It was done in the following ways editing, coding, tabulation and analyzing the collected data. (Grinnel et al. 1990; p, 275) 3.6.0. Editing After collecting questionnaires from respondents, there was editing of data to remove out errors and mistakes and to ensure completeness, accuracy, and uniformity of responses. 3.6.1. Coding Coding is the process of classifying responses into their respective categories. Coding is the process of grouping facts according to the themes and sub-themes of the study, Grinnel et al. (1990; p, 275). Coding was done to develop coding frames for questions asked and later for answers given. 3.6.2. Tabulation Tabulation is a technique in which the data can be processed and analyzed statistically. After coding and editing, data tabulation was done. Tabulation involves the use of statistical tables such as percentages frequency distribution representing the occurrence of response to particular questions. There were explanations about the nature of the relationship between variables indicated in the tables. The researcher did all this to present clear and understandable data. Tabulation therefore was used to depict the clear picture of the actual function in the subject matter.

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3.6.3. Data analysis techniques Moser and Kalton (1997: p, 14), said that once have been edited and coded in some kind of tables, and then other forms of statistical analysis are essential. For the purpose of this research study, both quantitative and qualitative means of analysis were adopted. 3.6.3.1. Qualitative data analysis This analysis procedure was applied while researcher deals with unqualified responses. The researcher here made observations on the views of respondents on some phenomena. 3.6.3.2. Quantitative data analysis For purposes of quantitative data analysis, the collected data was expressed in different tables especially the responses from the representative sample under study. Thus, questions concerning the management levels of the respondents were analyzed using this technique. 3.6.4. Tools for testing hypothesis Testing hypothesis was in accordance with Dr. VP. Micheals idea (2000:112), who says that hypothesis, refers to a special proposition formulated to be tested in a certain situation as a part of research, which states what researcher is looking for. He calls it a tentative generalization where the techniques to be used depends on convenience, availability of data and exposure to various methods, because of hope for a common procedure of testing is distant. Thus, the researcher tested the hypothesis using both qualitative and quantitative methods. 3.6. 5. Limitation of the study This research has certain limitations, such as the sample size that may affect the reliability of the study. The non-random sampling method also can lead to problems of sampling error, as person judgment is involved in the sample selection process, (Churchill 1992: p, 391). However, a researcher has to devise ways and means of either overcoming such limitations or at least minimizing their influences. Similarly, the researcher faced also the following limitations:

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The limitations faced during the research mainly were related to the nature of the population. The delay of the customer service and unanswered questionnaires by the respondents were expected to be a limitation in this study. Another biggest hurdle of ding research in developing countries is being able to obtain reliable, relevant, and sufficient data to enable a researcher make conclusion regarding the matter in question, very little information available on credit and saving and increase of investment related literature in Rwanda. Therefore to overcome the above-mentioned limitations, the researcher worked tirelessly and selected a representative sample. This makes the present study possible and fruitful since nearly all the respondents reacted positively to the study.

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CHAPTER FOUR

DATA ANALYSIS AND INTERPRETATION

4.0. INTRODUCTION
This chapter attempts to analyze the data collected, interprets it and presents various findings from the research in order to relate it with the study objectives, research question and hypothesis. In other words it provides the research questions with valid answers and its purpose was to crossexamine or to analyze the impact of saving and credit cooperatives on the increase of investment. According to Graves and Woodruff (1986:791), data interpretation is the process of drawing conclusions from data analysis The data is presented in form of statistical tables and the finding are based on the data collected from 10 respondents composed of big clients and the employees in charge of credit and recovering in RIM and also the managers interview. This chapter is presented in three (3) sections:

Section one gives the history and presentation of RIM, Section two presents the findings from the questionnaires where as section three presents answers to the research questions and hypothesis.

SECTION ONE

4.0. HISTORY AND PRESENTATION OF RIM

4.1. Historical Background of Rim

It is the innovation of Roman catholic church, according to the instructions NO 06/2002 of BNR, as a central bank, related to regulations of microfinances activities; to create microfinance and micro credits activities. In the purpose of integral development of human being especially, in rural population unfair people of urban areas, and medium people;
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The RIM S.A is the enterprise of microfinance created by Roman Catholic Church to Rwanda to participate in the action of complete development of citizens in particular toward a most underprivileged layer in farming environment. This enterprise was undertaken, experienced and thanks to its miscellaneous inspirations from different forms of saving and credit cooperatives. Those kinds of cooperatives from all dioceses were: NKUNGANIRE, from September 2000 in Kigali Diocese, whose purpose was poverty lending pilot. BARURANA, from 2000 in Kibungo, grouping 8 Associations of financial solidarity. WISIGARA, from 2002 in Kabgayi, grouping 6 Associations of financial solidarity. NGIRANKUGIRE, from 2002 in Cyangugu, whose clients are grouped in ASSOFI TWUNGANIRANE, from 2000 in Butare, whose client are grouped in ASSOFIs. NGWINUKORE, from 2002, in Nyundo/Kibuye, which helped widows to be selfish. MAGIRIRANE MU MAJYAMBERE, from 2001 in Nyundo/ Gisenyi, for mutual financial solidarity. TWISUNGANE, from 2002 in Ruhengeri, for loans to handcrafts. NTUKABUMWE, from 2002 in Gikongoro, for fighting against food insecurity.

4.1.1. Background and location of Huye Branch

According to BNR regulations about the microfinance institutions legally accepted, under authorization of the central bank, can open a branch, an agency or an office on all national territory/land in order to run microfinance activities. In such a case, the central has defined procedures for opening a new branch, agency or an office. Therefore, RIM S.A operates in all provinces of the country, thus, BUTARE branch runs its activities in HUYE and NYARUGURU districts (in southern province).
4.1.2. Shareholders

RIM S.A is a private limited company which shareholders are all Roman Catholic Dioceses of Rwanda and the CARITAS- RWANDA.

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4.1.3. Mission and Vision of RIM S.A

Since its creation, the RIM S.A had the objective of providing services of saving and credit especially to the poor but that are active economically as institution of Microfinance. RIM has the following mission: To contribute to the reduction of poverty. To contribute to the flight of economic growth of the country by backing the mind of the population at the enterprise through credit deliverance. To promote the human dignity.

Vision of RIM RIM S.A has the mission fulfill the following: To raise the poor population but economically active To give loans dispossessed urban people To respond to a high demand of small entrepreneurs.

4.1.4. Objectives of RIM S.A

Its objectives is to provide the services of saving and credit like an institution of microfinance on the territory of Republic of Rwanda in order to contribute to the reduction of the poverty of active people economically and the women in individuals. This objective would be reached through the promotion of the socioeconomic preoccupations of the customers, the application and the respects of the principles of viability and durability, backing of the culture of saving and the bound guaranty has shortcoming the Associations of Financial Solidarity (ASSOFI). In its assignments, the RIM does very important stains in the development of the tools of collection of information to all levels and in the insurance of the scrupulous replenishment to minimize the operational risks.
4.1.5. Strategies

As microfinance, RIM S.A put in centre of its action the human lasting improvement especially the poor people i.e. the disadvantaged level in rural areas:

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To increase the revenue of poor people and everlastingly. As active microfinance, to obey to some principles and practices of good management to ensure its funds viability (to respect the going concern principle).

4.1.6. Organization structure of RIM S.A

General Assembly Accounts commissariat Boards of Directors

Director General

Inspection & Audit

Secretariat of Direction

Administrative & Finance Dpmt sssdddddddpt HR Management

Commercial Department Research& Development

Procurement

Training Services

Accounting & Treasury

Accountants help

Lawyers

ICT Services Branches Management vi

Source: RIM S.A

SECTION TWO
4.2. Findings from the Questionnaires
4.2.1. Respondents identification a. Classification of respondents by sex group Sex composition of the respondents was analyzed to show the number of male and female that constituted the respondents. Table4.1. Customer sex Valid Frequency Percent Valid Male 6 60.0 40.0 100.0 Percent 60.0 40.0 100.0 Cumulative Percent 60.0 100.0

Female 4 Total 10

Source: Primary data

Figure 4.2. Customer sex identification Table 4.1. And figure 4.2. Indicate that both male and female are covered equally in this research and the highest percentage was of male sex (60%) and female sex (40%) respectively. From this
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information, it is observed that in RIM, the distribution of respondents according to sex is not widely dispersed. RIM adopts passive exclusion where both sexes are fairly treated in all decisions concerning hiring, promoting and paying. Therefore Rwanda stands a chance to fulfill its vision of having knowledge based economy development by increasing investment through cooperatives, because the majority of the population also participates by 40% which is not widely but still females need to be encouraged to participate in investment program
4.2.2. Classification of respondents by age group

Age groups are also essential to obtain the information about the topic under research and to assess the allegation that young people are dynamic and can adapt very fast to new things such as investment program and that they are quick in their decisions (Schneier, p. 141). Table 4.2. Customer age Valid Frequency Percent Valid Between 20-35 5 Between 35-45 4 Between 45-60 1 Total Source: Primary data 10 50.0 40.0 10.0 100.0 Percent 50.0 40.0 10.0 100.0 Cumulative Percent 50.0 90.0 100.0

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Figure 4.3. Customers age group

Table4.2. and figure 4.3. Indicates that the majority of respondents according to age group show that all groups of respondents are capable and able to use the services offered by their cooperative.
4.2.3. Type of saving before joining bank

Table4.3. Type of saving before joining a bank Valid Frequency Percent Valid friends or relatives secret place saving with informal group Total Source: Primary data 1 5 4 10 10.0 50.0 40.0 100.0 Percent 10.0 50.0 40.0 100.0 Cumulative Percent 10.0 60.0 100.0

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Figure 4.4. Type of saving before joining a bank

This figure and Table 4.3 shows that the majority of respondents surveyed making a percentage of 50% in this study were saving at secret place. Others are 40% were saving at informal group and others composed of 10% were saving at friends or relatives. This graphic gives us the picture of the types people were used as tool of saving before joining bank or cooperative. After the arrival of banks and cooperatives, it shows that people have the knowledge about them and they change their style and types of saving, because majorities are using them.
4.2.4. Form of Saving

The table and figure below, show the percentage of saving forms utilized by customers at RIM, with the motivation of future investment.

Table 4.4. form of saving

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Valid Frequency Percent Valid real estates 1 10.0 10.0 10.0 70.0 100.0 Percent 10.0 10.0 10.0 70.0 100.0

Cumulative Percent 10.0 20.0 30.0 100.0

Domestic animals 1 Land cash at bank Total Source: Primary data 1 7 10

Figure 4.5. Form of saving

Table and figure above illustrates different forms of saving as it shows in percentages; 10% were used real estate as a form of saving; Also those who saved in domestic animals were 10%; Land are another form of saving used by 10% of all respondents. The majority of respondents composed of 70% were used cash at bank as form saving, means that they have the reason behind of asking credit to increase their investment. The use of cash at bank as a form of saving is one fact of increasing investment through saving and credit cooperatives.
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4.2.5. Purpose of saving

Table 4.5. Purpose of saving Valid Frequency Percent Valid Household needs Loan savings Business Total Source: Primary data against 3 3 4 10 30.0 30.0 40.0 100.0 Percent 30.0 30.0 40.0 100.0 Cumulative Percent 30.0 60.0 100.0

Figure 4.6. Purpose of saving

The research shows in table and figure 4.6 that the purpose of saving in the majority of people is for business. The percentages shows that 40% were saving for businesses and 30% were saving for loan against saving and again 30% were for household needs.
4.2.6. Keeping records of economic activities

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Table 4.6. Do you keep records of your economic activities Valid Frequency Percent Valid Yes No 7 3 70.0 30.0 100.0 Percent 70.0 30.0 100.0 Cumulative Percent 70.0 100.0

Total 10 Source: Primary data

Figure 4.7. Do you keep records of economic activities?

This figure and table shows that more participants opted to record economic activities by a ratio of 70%. However, a short number of participants did not record economic activities; for those are the same to 30%.

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Participants believe that, recording economic activities is one of the way that helps people to minimize risk while plans to make investment. When recording your economic activities it helps you to make auto control of your expenses and reduce them and also make them stable.
4.2.7. Period of saving

Table 4.7. When do you save

Valid Frequency Percent Valid When profit are made when you need a loan when you need security of you money Total Source: Primary data 1 2 7 10 10.0 20.0 70.0 100.0 Percent 10.0 20.0 70.0 100.0

Cumulative Percent 10.0 30.0 100.0

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Figure 4.8. When do you save?

This table and figure present different perception on their period of saving; But a big number save when they need security of their money. Those present the percentage of 70% and other 20% are saving for the reason of looking for loan in future, other 10% are saving when profit are made.
4.2.8. Motif of saving

Table 4.8. Motif of saving

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Valid Frequency Percent Valid pay future accumulate capital to invest Total Source: Primary data school fees in 1 10.0 Percent 10.0

Cumulative Percent 10.0

9 10

90.0 100.0

90.0 100.0

100.0

Figure 4.9. Motif of saving

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90% of the respondents as it shown in table and figure above were saving with the motif of accumulated capital to invest and 10% present the number of respondents who save by the motif of covering school fees in future. This means that, the role of credit and saving cooperatives are crucial in mobilizing and interesting people to save for future investment.
4.2.9. Type of cooperative assisting in

Table 4.9. Types of cooperatives assisting in Valid Frequency Percent Valid credit saving Source: Primary data and 10 100.0 Percent 100.0 Cumulative Percent 100.0

Figure 4.10. Types of cooperative assisting in

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As we are doing research under credit and saving cooperatives; the respondents views under the question of the types of cooperatives assisting in present that 100% of respondents are assisting in saving and credit cooperative.
4.2.10. Purpose of working in cooperatives

Table 4.10. Purpose of working in cooperatives Valid Frequency Percent Valid easy to get capital to invest gaining more than 5 50.0 Percent 50.0 Cumulative Percent 50.0

working alone easy to get loan Total Source: Primary data

2 3 10

20.0 30.0 100.0

20.0 30.0 100.0

70.0 100.0

Figure 4.11. Purpose of working in cooperatives The research analyses show that 50% of respondents work in cooperatives with the purpose of getting capital to invest. Means that when you are working well with saving and credit
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cooperative, your account are dynamic, there is no obstacle for you to get credit to invest in projects while you need it. Others 30% work with intention to get loan, this loan also is for investing in benefit works and 20% of respondents views say that they gain more than working alone. This is good because when you have a good environment, you can do something bigger than working alone, it seems to be in comfortable zone. Everything are there; Ideals, money, etc.
4.2.11. Effect of saving and credit cooperatives on investment

Table 4.11. Effect of credit and saving cooperatives on investment Valid Frequency Percent Valid poverty reduction easy to get capital to invest in projects Total Source: Primary data 3 7 10 30.0 70.0 100.0 Percent 30.0 70.0 100.0 Cumulative Percent 30.0 100.0

Figure 4.12. Effect of credit and saving cooperatives on investment

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The effect of saving and credit cooperatives is crucial as it is shown in table and figure above represent respondents views on that effect. The 30% of the level of respondents views state that they reduce poverty among peoples and 70% say that it is easy to get capital to invest; this is like a supporting answer to the first respondent views but also it combine both cooperative side and clients side; both are making an investment parallel. Cooperative investing in clients as it generate profit from the money borrow to their clients and as a reverse clients also generate income or profit on the money investing in their projects.
4.2.12. Level of poverty headcount ratio by investment development

Table 4.12. Level of poverty headcount ratio by investment dvpt Valid Frequency Percent Valid very good 2 good Total 8 10 20.0 80.0 100.0 Percent 20.0 80.0 100.0 Cumulative Percent 20.0 100.0

Source: Primary data

Figure 4.13. Level of poverty headcount ratio by investment dvpt

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Table and figure 4.13 indicates that the level of poverty headcount ratio by investment development is good at the level of 80% of the respondents views and also is very good at 20% of respondents views. This shows that the impact of saving and credit cooperatives is clear to everyone in the society.
4.2.13. Profit generated by investment

Table 4.13. Do your investment generate profit Valid Frequency Percent Valid yes 10 100.0 Percent 100.0 Cumulative Percent 100.0

Source: Primary data

Figure 4.14. Profit generated by investment As peoples behavior states, you cant make an investment which will not generate profit in the future; so, the investment made must generate profit. Confirmed by the respondents views that the investment made generate profit at 100% of respondents views.

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4.2.14. Problem encountered with saving and credit cooperatives

Table 4.14. Did you encounter any problem with saving and credit cooperatives? Valid Frequency Percent Valid Yes No 2 8 20.0 80.0 100.0 Percent 20.0 80.0 100.0 Cumulative Percent 20.0 100.0

Total 10 Source: Primary data

Figure 4.15. Problem encountered with saving and credit cooperatives Table and figure 4.15 shows that the majority of respondents did not encountered any problem with saving and credit cooperatives at the level of 80% of respondents views; While 20% of respondents said that they had encountered problems with it. Some of those problems are based on the service offered, problem on their account, rate of loan requested, etc.

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SECTION THREE
4.3. Answers to the research questions and hypothesis
4.3.1. Answers to the research questions and hypothesis

This section deals with the information, comments, about the impact of saving and credit cooperatives on the increase of investment in Rwanda, per research questions and hypothesis.
4.3.2. Response to whether the saving and credit cooperatives increase or decrease investment?

The answer was positive. The saving and credit cooperatives contribute much in the increase of investment as seen in early chapter. The findings reveal that, since the saving and credit cooperatives started in Rwanda, positive contribution of investment is seen through significant inflow of revenues in the different forms. This lead to increasing in investment attraction of new investors, substantial contribution to development goals and creation of new quality jobs came as a supplement to this increased number of entrepreneurial.

4.3.3. Response on the relationship between saving and credit cooperatives and increase of investment

The response got was positive, the saving and credit cooperatives encourage, help and attract many investors to bring capital and invest in some enterprises were on the market.

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CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1. Introduction The main purpose of this chapter is to make a summary of the major findings of the research and draw conclusions, based upon findings. Besides, recommendations for the betterment of the impact of saving and credit cooperatives on the increase of investment in Rwanda, suggestions for further research were considered. 5.2. Summary The objectives of the research was to assess the impact of saving and credit cooperatives on the increase of investment in Rwanda as a general objective, to determine the effectiveness of saving and credit cooperatives to attract investors, find limitations to the saving and credit cooperatives performance, to advance measures which can be implemented so as to increase the contribution of saving and credit cooperatives in increase of investment. The research questions were formulated as; there is a strong relationship between the saving and credit cooperatives and the increase of investment. These research questions were of great importance in achieving research objectives. Documentation was so much used; the relationship between the saving and credit cooperatives and investment is positive one. The research is advantageous to the researcher in terms of award of a degree, to the institution, the research findings will help develop more improvement in saving and credit cooperatives to attract investor. And the research will also help other people interested in further research as reference. 5.3. Major findings The findings of research are presented in accordance to the objective of the research and the research questions, and basing mainly on primary data on saving and credit cooperatives and increase of investment.

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5.4. Conclusion Basing on the results of the study, the following conclusions are made: The results show that saving and credit cooperatives have impact on increase of investment by saving and credit cooperatives play an important role in attracting, the Investment confirming results in table 4.13. Moreover, saving and credit cooperatives offerings on the stock market contribute in increasing investment. Saving and credit cooperatives are positively related to investment program, confirming earlier results on the determinants of investment. Indeed, the development of Microfinance institutions include saving and credit cooperatives imply more respect for property rights, better regulation, less policy risk and more transparency, thereby encouraging investment and creating incentives which are crucial to encourage the participation of investors, thus creating a positive investment and creating incentives which are crucial to encourage the participation of local investors, thus creating a positive spillover effect on investment. Saving and credit cooperatives have had, for the most part, a positive impact on the economics of our country which shows by a big number of investors. 5.5. Recommendations saving and credit cooperatives functions should remain active, not only in order of increasing investment, but also to help and advice and support investors where the government and other institutions do not have the ability to help them and if need be to take appropriate actions. Moreover the policy to use the proceeds from saving and credit cooperatives should be put in place including reinforcing capacity building, investing in productive projects with high returns and infrastructures facilitating the access to basic goods and services. Saving and credit cooperatives should retain specialized consultants, whenever needed, to prepare comprehensive studies and reach targeted investors. Saving and credit cooperatives should be within the frame of the increase of investment towards the less developing sectors to raise the pointers of the achievements of the whole economy. Management of information about the performances of the saving and credit cooperatives in general and increase of investment in particular is necessary to keep track of the implementation

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of corporate social responsibility. All the regulations should be reinforced and become fully operational in order for them to play their role of social protection. Rwanda should play a key role to ensure regional security. Rwandas internal security alone is enough to guarantee the security of investment and yet political stability is of greatest importance from the viewpoint of investors. Increase of investment will only take place in a country that is reasonably stable and peaceful.

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Bibliography
Anita Campion and John Owens, MABS: A Sustainable Approach to Rural Microfinance, Micro banking Bulletin, July 2003. Anita Campion and John Owens, Sustainable Approach to Rural Microfinance, Micro banking 2003). Charles W.L.Hill (2003:25) defines investment as commitment of funds F. Modigliani, "The Role of Intergenerational Transfers and the Life-cycle saving in the Accumulation of Wealth", Journal of Economic Perspectives, (n. 2, 1988), F. Modigliani, "The Role of Intergenerational Transfers and the Life-cycle saving in the Accumulation of Wealth", Journal of Economic Perspectives, n. 2, 1988. G. Dell'Amore, "Household Propensity to Save", in A. Mauri (ed.), Mobilization of Household Savings, a Tool for Development, Finafrica, Milan, 1983. Grinnell and Williams (1990:42), research methods http://www.investorwords.com/1193/credit.html International Trade Forum, Issue (2002: 30). KAKOOZA TEREZA, (1996), Introduction to research methodology, Uganda: National adult education association KAMPALA Micro Save-Africa and Equity Building Society in Kenya, 2003 MOSER C.A and KALTON (1997), Survey method in social investigations, New York. Nthenya Mule, Susan Johnson, Robert Hickson. Wambui Mwangi. The Managed ASCA Model: Innovation in Kenya's Microfinance Industry. Micro-Save Africa. 2001 OLeary, z., 2004.The essential guide to doing research. Sage publication Robert Grosse and Duane Kujawa (1992:93) further go on to make a distinction between the two types of investment UNCTAD (2000:2), developing countries and transition economies University of the Western Cape, 2002. Research proposal guide. Cape Town, South Africa Yaw Asante, determinants of private investments behavior, (2000:1)

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