Commercial Bank Financing and the Development of the Private Sector in Rwanda. A Case of Bank Populaire Du Rwanda (Bpr)

ABSTRACT For Rwanda to develop as forecasted, the private sector had to play the driving role through involvement of commercial banks in assisting entrepreneurs and business operators to easily access finance that could lead to the economic growth. However, the private sector is still facing the problem of access to finance. This study was carried out on assessing the contribution of commercial banks financing and development of private sector in Rwanda. The objectives of the study was to assess effectiveness of commercial bank financing to the development of private sector in Rwanda, to evaluate the role of commercial banks in spearheading the private sector growth in Rwanda and examine whether the amount of commercial banks financing influences the growth and development of the private sector in Rwanda. The research reviewed the existing literature related to the study. In the framework to achieve the study objectives, the study was conducted by using cross sectional survey research design. The researcher's study population was 260 People's Bank staffs, 420 private sector operators and 140 staffs of the national bank of Rwanda. Random sampling technique were used to obtain a sample of 150 for People's Bank staffs ,200 for private sector operators and 100 for staffs of the national bank of Rwanda by using Krejcie and Morgan table (1970). The researcher find that the commercial banks have prayed a big role by giving loans to businessmen, facilitating the private sector to manage their deposit and providing trainings for private sector. It was found that commercial banks financing to the private sector fuels business growth and development in the private sector whereby 98% of the respondents applied for funds to finance their project. It was found that National Bank of Rwanda sets different regulations for commercial bank in order to help private sector access to finance easily, to provide monthly report of different activities in order to assess their impact on the development of the private sector. Finally, the commercial banks have played a big role to the development of private sector in Rwanda; it has been recommended that BPR should keep facilitating private by giving different faci litation to businessmen aimed at increasing the growth and development of private sector. It has been recommended that National Bank of Rwanda has to keep monitoring commercial banks and require them to present the monthly reports aimed at assessing their impact on the development of the private sector in Rwanda. The findings of this research, will help the private sector to establish a crucial linkage with the commercial banks in order to boost their development.