

































 IJO- INTERNATIONAL JOURNAL OF SOCIAL SCIENCE AND HUMANITIES RESEARCH  
( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF 
SMEs IN RWANDA 

(2020-2024) 

Obiora Peters,Emeka PhD 
School of Post graduate Studies, Kigali Independent University, Rwanda 

 
DAMLABEN, Teku Charly De Barros 

Department of Finance 
Kigali Independent University, Rwanda 

 

ABSTRACT 
 
Fintech is instituted to revolutionalize financial transactions and aid SMEs growth, 
however, the impact is minimal or encumbered. This study investigated the impact of 
financial technology on the growth of SMEs in Rwanda(2020-2024); using digital 
lending access, mobile money, digital credit platforms, and digital wallets on SME 
growth. A quantitative research design was employed, using a descriptive and 
explanatory survey approach on a population of 25,000 registered SMEs. A stratified 
random sampling technique was applied to select 379 SMEs respondents.  The 
findings revealed that digital credit platforms had a strong positive effect on SME 
survival/longevity (β = 1.061, p < 0.001) and market expansion (β = 1.55, p < 0.001) 
but were not significant for employment growth (β = 0.251, p = 0.127). Mobile 
money significantly improved survival (β = 1.764, p < 0.001) but had no significant 
influence on market expansion (β = -0.298, p = 0.143) or employment growth (β = -
0.118, p = 0.673). Digital wallets significantly enhanced market expansion (β = 0.61, 
p < 0.01) and employment growth (β = 0.588, p < 0.05) but negatively impacted 
survival (β = -1.4, p < 0.001). Digital lending showed a consistent negative influence 
on all three growth dimensions: survival (β = -0.667, p < 0.001), market expansion (β 
= -1.172, p < 0.001), and employment growth (β = -0.291, p = 0.09). The study 
concluded that digital credit platforms and mobile money best support longevity, 
while digital wallets enhance efficiency and job creation. The study recommends 
restructuring digital loans, expanding financial literacy, improving wallet security, 
and enhancing mobile money with business-friendly features. 
 

 
INTRODUCTION 
This study sets to investigate the influence which fintech has on SMEs growth in 
Rwanda. This is achieved through background of study, conceptual, theoretical &, 
empirical reviews, methodology, results, conclusion and recommendation. 
 
1.1 Background of the Study 
In recent decades, Financial Technology (FinTech) has revolutionized access to 
financial services across the globe, particularly by offering innovative, digital 
solutions to traditionally underserved populations and small businesses. Globally, 
FinTech services,including mobile payments, digital lending, online banking, and 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

crowdfunding platforms, have significantly transformed how individuals and 
enterprises manage, save, and access capital. According to the World Bank (2022), 
nearly 76% of adults globally now have access to a financial account, up from 51% in 
2011, largely driven by the rise of digital finance. FinTech has become a catalyst for 
economic inclusion, especially for small and medium-sized enterprises (SMEs), 
which are often constrained by limited access to credit and traditional banking. A 
report by the International Finance Corporation (IFC, 2020) estimates that globally, 
the SME financing gap exceeds $5.2 trillion annually, with digital financial services 
positioned as a key strategy to narrow this gap. 
On the African continent, the FinTech sector is among the fastest-growing in the 
world. In 2021, Africa saw over $2 billion in FinTech investment, with countries like 
Nigeria, Kenya, South Africa, and Egypt leading the market in mobile banking, digital 
wallets, and peer-to-peer lending (BFA Global, 2022). FinTech has been pivotal in 
addressing financial exclusion, particularly in regions with low banking infrastructure 
but high mobile phone penetration. According to GSMA (2023), mobile money 
accounts in Sub-Saharan Africa surpassed 621 million users, facilitating over $832 
billion in transactions in 2022 alone. These innovations have been critical for SMEs, 
providing alternative credit scoring models, instant payment solutions, and tools to 
manage business cash flow. However, challenges such as digital literacy, cyber 
security, regulatory fragmentation, and limited interoperability still hinder full-scale 
adoption and impact across the continent. 
Within the East African region, countries have embraced FinTech as a cornerstone of 
inclusive finance. Kenya, through M-Pesa, has been a global case study in mobile 
financial services, enabling millions of SMEs to accept digital payments, access loans, 
and run businesses more efficiently. According to FSD Kenya (2021), over 80% of 
Kenyan SMEs now use mobile money for business transactions. Similarly, Uganda, 
Tanzania, and Ethiopia have launched regulatory sandboxes and digital finance 
policies to expand FinTech adoption. Despite these strides, East Africa faces 
persistent barriers such as limited cross-border interoperability, infrastructure gaps in 
rural areas, and constrained access to venture capital for local FinTech startups (AFI, 
2022). These issues affect the scale at which FinTech solutions can effectively 
support SME growth across the region. 
In Rwanda, the government has made FinTech a central pillar of its Vision 2050, 
aiming to transform the country into a knowledge-based and cashless economy. The 
National Bank of Rwanda (BNR) and Rwanda FinTech Association have been 
proactive in creating an enabling environment through regulatory frameworks, 
financial sector digitization, and public-private partnerships. As of 2023, over 6.5 
million Rwandans were actively using mobile money services, accounting for more 
than 400 million transactions valued at RWF 6.2 trillion annually (BNR, 2023). 
Additionally, mobile penetration in Rwanda stands at ≈ 84%, and internet penetration 
at 66% (RURA, 2023), creating fertile ground for FinTech expansion. SMEs represent 
over 98% of registered businesses in Rwanda, contributing about 41% to GDP and 
employing more than 60% of the labor force (MINICOM, 2022). However, only 35% 
of Rwandan SMEs have access to formal credit, with many citing collateral 
constraints, complex procedures, and high interest rates as barriers (World Bank, 
2021). This financing gap presents a critical opportunity for FinTech to deliver 
affordable, fast, and scalable financial solutions. 

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 IJO- INTERNATIONAL JOURNAL OF SOCIAL SCIENCE AND HUMANITIES RESEARCH  
( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

Several studies have attempted to assess the role of FinTech in economic development 
and SME financing. For instance, Zhao et al. (2020) found that FinTech improves 
SME access to credit by using alternative credit scoring methods. Ozili (2018) argued 
that FinTech helps reduce the cost of financial services and promotes financial 
inclusion, especially in Africa. In the East African context, Muthiora (2019) studied 
the positive effects of digital credit on SME resilience in Kenya. However, empirical 
studies specific to Rwanda are limited, particularly those that assess the direct impact 
of FinTech services on SME growth indicators such as revenue expansion, job 
creation, market access, and productivity. 
Moreover, existing research in Rwanda often generalizes digital finance under mobile 
money use without disaggregating the various FinTech verticals—such as digital 
lending, crowd funding, digital insurance, and blockchain applications—each of 
which may have different impacts on SME performance. There is also a lack of 
comprehensive data on how SMEs in rural versus urban areas engage with FinTech 
platforms, and what barriers they face in accessing or benefiting from these services. 
Additionally, the integration of non-financial digital services, such as business 
management tools, digital bookkeeping, and e-commerce support, remains largely 
unexplored in the local literature. 
Given Rwanda’s ambitious goal to become a middle-income country by 2035, it is 
imperative to understand how FinTech can be strategically leveraged to unlock the 
full potential of SMEs, especially in sectors such as agriculture, manufacturing, and 
services. The urgent need to undertake this study stems from the dual challenge of 
limited SME financing and under-researched FinTech performance in Rwanda. A 
rigorous, data-driven investigation into the impact of FinTech on SME growth will 
not only fill critical knowledge gaps but also provide actionable insights for 
policymakers, regulators, FinTech innovators, and SME support institutions. Without 
such research, Rwanda risks missing a vital opportunity to accelerate inclusive 
economic development through digital financial innovation. 
Despite Rwanda’s impressive strides in financial inclusion marked by widespread 
adoption of mobile money and other digital financial services many Small and 
Medium Enterprises (SMEs) still face challenges in accessing fintech tools that are 
tailored to their business growth needs. Much of the existing digital financial 
infrastructure remains consumer-focused, and there is a notable lack of empirical 
evidence from Rwanda that explores how individual FinTech components contribute 
specifically to SME development. This research is driven by the need to fill this gap 
by disaggregating the effects of four major FinTech tools digital lending, mobile 
money, digital credit platforms, and digital wallets on SME growth indicators. 
Therefore, the study seeks to: (i) examine how digital lending influences SME growth, 
(ii) investigate the impact of mobile money on SME performance, (iii) determine the 
contribution of digital credit platforms to SME development, and (iv) assess the effect 
of digital wallets on SME operational expansion. By doing so, the study aims to 
provide actionable insights for policymakers and stakeholders supporting SME 
growth through financial technology in Rwanda. 
 
 
2.0 Literature Review 

The concepts,ideas,theories and findings of prior authors are discussed hereunder. 

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 IJO- INTERNATIONAL JOURNAL OF SOCIAL SCIENCE AND HUMANITIES RESEARCH  
( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

2.1 Conceptual Review 

2.1.1 Digital Lending Access 

Digital lending access means allowing credit on digital channels digital devices or 

digital tools that can be accessed via mobile apps, USSD, and online gateways 

without physical contact with a bank. To SMEs, especially in Rwanda, it provides 

quicker and nimble source of financing, which utilizes alternative data to create a 

credit score. Researchers such as Zhao et al. (2020) and Muthiora (2019) confirm that 

it facilitates increased growth of SMEs by enhancing access to working capital. 

Nevertheless, the obstacle such as the interest rates and the lack of financial literacy 

remains. As claimed by the World Bank (2022) and Stewart et al. (2018), the cost 

reduction, increased access by using big-data analytics, and unrestricted financial 

services innovation make digital lending a breakthrough instrument in financial 

service providers and SME development 

2.1.2. Mobile money 

Financial services deployable using mobile money, have spurred the growth of SMEs 

to a great degree through its increasing financial inclusion as well as the efficiency of 

operations (Jack & Suri, 2024; Demirguc-Kunt et al., 2023; Venkatesh & Davis, 

2021). Experience supports mobility money as sources of better revenues and credit 

availability (Abor & Quartey, 2023; Ndungu & Waema, 2024). Nevertheless, the 

limitations restrict the full delivery such as illiteracy in digital environments, security 

risks, excessive costs of transaction, and weak platform capabilities(Chisholm 2005). 

2.1.3 Digital wallets 

In Rwanda, online lending platforms are available that provide short-term non-

collateral loans online/over mobile phones that can help SME access finance (GSMA, 

2023; Animhiaga, 2025; Xelius, 2025). Although there are advantages, the problems 

identified include being over-indebted (Rizzi & Kumari, 2021), high interests 

(Muthoni, 2024), and digital illiteracy (Animhiaga, 2025). Their growth potential is 

explained by theoretical models that include the works of Schumpeter (1934) and the 

ones developed by Beck et al. (2023) or Venkatesh and Davis (2021). it is believed to 

improve funding of SMEs in Rwanda(Njenga & Kamau, 2023; Kyaruzi et al., 2024).     

 

 

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 IJO- INTERNATIONAL JOURNAL OF SOCIAL SCIENCE AND HUMANITIES RESEARCH  
( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

2.1.5 SMEs Growth 

MSMEs make 98 percent of the businesses in Rwanda, have a 33 percent contribution 

to GDP, as well as employ above 2.5 million individuals (Ministry of Trade and 

Industry, 2025; Utembinema et al., 2023). The terms are different in different places 

around the world and the classification of SME in Rwanda depends on capital, 

turnover and numbers of employee (MINECOFIN, 2012; Kushnir, 2010; IFC, 2013). 

Nevertheless, despite the magnitude of this economic relevance, issues such as poor 

access to credit, informality, and market fragmentation still exist (Ministry of Trade 

and Industry, 2025). More than 70 of them are informal, preventing investment 

(Utembinema et al., 2023). The measures by the government involve AfCFTA 

promotion, financial literacy, and post-COVID recovery plans (Rwigema, 2020; NBR, 

2023). it is assessed in this study as Market Expansion, survival and longivity and 

employment generation. 

 

2.2 Theoretical Review 

The theoretical anchorage ofthis study is on financial inclusion theory, Technology 

Acceptance Model (TAM) and Resource-Based View (RBV). 

2.2.1. Financial Inclusion Theory 

The Financial Inclusion Theory was broadly developed by the World Bank and 

financial economists in the early 2000s, with roots in development economics and 

financial intermediation. it argues that access to financial services spurs growth and 

reduces poverty, especially in underserved sectors (Demirgüç-Kunt et al., 2023; 

Okello & Musoke, 2022). Its relevance to FinTech in Rwanda lies in explaining how 

tools like mobile wallets and digital credit enhance SME growth. However, it assumes 

access guarantees usage, overlooking digital literacy and trust challenges. 

 

2.2.2. Technology Acceptance Model (TAM) 

 

Technology Acceptance Model (TAM) is a model developed by Davis (1989) to 

explain the acceptance of technology that is based on the Perceived Usefulness (PU) 

and Perceived Ease of Use (PEOU). Being implemented in Rwanda, it can be used to 

determine the adoption of FinTech as the SME uses its services, such as MTN MoMo 

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 IJO- INTERNATIONAL JOURNAL OF SOCIAL SCIENCE AND HUMANITIES RESEARCH  
( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

and Yego Pay (Mugambi & Wambua, 2022; Ngabire & Uwizeyimana, 2023). On the 

one hand, TAM has an advantage of being a non-complex theory with an emphasis on 

the notion. However, it does not embrace such nuances as trust and digital literacy. 

The results of its application demonstrate perceived utility and ease as motivators or 

inhibitors of FinTech usage as options that influence specific interventions among 

Rwandan SMEs. 

2.2.3. Resource-Based View (RBV) 

Resource-Based View (RBV) developed by Barney (1991) describes a firm success 

by use of valuable, rare, inimitable and non-substitutable (VRIN) internal resources. 

FinTech tools applied to the SMEs in Rwanda can serve as a strategic tool that 

enhances access to funds, financial record keeping, and market competitiveness 

(Nyaga & Karimi, 2023; Habumuremyi, 2024). Although RBV is a powerful 

framework of strategy, it has faced criticism with regard to externality. In the given 

study, it indicates the manner in which SMEs use in-house capabilities through 

Fintech to attain their sustained growth. 

 
2.4 Empirical Review 

This section reviews prior authors studies including the methodologies and their 

findings. 

Siaka (2025) explored Rwanda’s mobile money and merchant payments ecosystem, 

showing how SMEs using MTN MoMo and Airtel Merchant accounts increased 

transaction efficiency and expanded customer reach. Using descriptive analysis of 

transaction volume and merchant survey data, the study concluded that digital 

payment onboarding lowered barriers and supported SME sales growth through 

increased convenience and lower cost barriers  

Sanga and Aziakpono (2024) conducted a continent-wide empirical study on FinTech 

developments and SME digital finance, including Rwanda. Using quantile regression 

across 47 African countries and controlling for institutional quality, they found 

FinTech development significantly improves SME access to finance in countries with 

moderate to high digital infrastructure. The study concluded that Rwanda’s digital 

ecosystem offers fertile ground for SME growth through FinTech . 

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 IJO- INTERNATIONAL JOURNAL OF SOCIAL SCIENCE AND HUMANITIES RESEARCH  
( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

Rizzi & Kumari (2021) performed qualitative interviews with 30 Rwandan mobile 

money users, including SME operators, examining trust and data usage in digital 

lending. The study found that SMEs appreciated fast data-driven credit approvals via 

mobile platforms, but emphasized concerns over data privacy and transparency. It 

concluded that improving data governance could increase SME uptake of digital 

credit . 

Animhiaga (2025) provided industry data on Rwanda’s SME loan sector 

transformation, showing that between 2019–2024, SME loans grew by 25%, partly 

due to digital credit platforms integrated with mobile wallets. Descriptive and trend 

analysis highlighted that FinTech-driven credit access via mobile reduced traditional 

loan barriers, leading to greater SME investment and formalization . 

Animhiaga (2025) also reviewed consumer credit via mobile lending services, noting 

that by mid-2022 over 16 million mobile money accounts enabled instant loans 

through MTN MoKash and Airtel Tigo. The study concluded that while mobile credit 

eased access for SMEs, concerns remain around high rates and over-indebtedness. It 

emphasized need for regulatory safeguards in SME finance . 

Xelius (2025) surveyed Rwanda’s FinTech landscape, with mobile money and digital 

lending comprising over 60% of sector activity. The report used descriptive and 

correlational methods, finding that mobile wallets and digital loans significantly 

increase financial inclusion (up to 96% adult inclusion) and SME digital adoption. It 

concluded that regulatory initiatives, like interoperable payment frameworks, are 

accelerating SME access to FinTech tools . 

Siaka (2024) reported on Rwanda’s National FinTech Strategy targeting SME 

inclusion via digital payments and credit. While primarily policy analysis, it 

incorporated rollout data showing SME adoption rates rise where digital literacy is 

prioritized. Concluding that strategy frameworks are essential for broad SME FinTech 

uptake, the report supports institutional backing as a catalyst for SME growth  

Mobile money and SMEs growth 

In a recent mixed-methods study titled Mobile Money and SME Growth: A Zambian 

Perspective, Sinkala (2023) surveyed 150 SMEs in Lusaka, exploring how mobile 

money adoption affects transactional efficiency, cost reduction, market access, and 

financial management. Using both qualitative interviews and quantitative surveys, 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

Sinkala identified a significant positive correlation: SMEs using mobile money 

reported higher operational efficiency, broader customer reach, and better financial 

controls, reinforcing the technology's transformative role in emerging economies  

Complementing these findings, Kimathi, Mwangi, and Mutiso (2025), in their study 

Effect of Mobile Payments on the Financial Performance of SMEs in Kirinyaga 

County, analyzed 160 SME owners in Kenya using structured questionnaires and 

SPSS-based Pearson correlation. Their results indicated that mobile payments 

significantly improved liquidity management, reduced operational costs, and 

enhanced cash flow, demonstrating a clear positive effect on SME financial 

performance  

Additionally, cross-country data analysis by Beck et al. (2022) in Small versus large 

firms: Mobile money, traditional financial services and firm productivity in Africa 

examined firm-level productivity across multiple African nations. Using productivity 

regressions with interaction terms for mobile money and bankcapital, their 

quantitative results revealed that SMEs using both mobile money and bank capital had 

significantly higher labor productivity than peers without mobile payments. Notably, 

this productivity boost was absent among large firms, highlighting the unique impact 

of mobile money on smaller enterprises. 

Digital Credit Platforms And Sme Growth 

In Kenya’s economy, Muthoni (2024) revealed in the role of digital credit in Kenya’s 

Growth” that 87% of digital credit borrowers were SME owners, using funds to 

support working capital and investment in equipment. The study employed national-

level digital credit flow data paired with SME performance indicators and found a 25% 

increase in agricultural income and projected up to a 2% contribution to GDP growth 

by 2025, demonstrating the transformative role of mobile lending on SME expansion. 

A rigorous randomized controlled trial by Björkegren et al. (2022) in Nigeria titled 

“Instant Loans Can Lift Subjective Well Being” examined short-term digital loans 

delivered via mobile platforms. Although the loans improved subjective well-being, 

they did not significantly raise income, consumption, or business resilience after three 

months, signaling that while useful, digital credit may not directly lead to measurable 

SME performance gains. 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

In Nairobi, Okiro (2016) investigated digital credit's effect on Kenyan SMEs using 

231 SMEs surveyed, focusing on turnover and cash flow. The study applied 

descriptive and correlation analysis, discovering a weak but statistically significant 

relationship with turnover, yet a strong positive link with cash flow, highlighting that 

digital loans enhance liquidity, even if turnover gains are modest. 

Expanding the scope across Africa, Sanga and Aziakpono (2025) analyzed digital 

credit's influence on SME growth in 47 African countries using quantile regression. 

Their study found heterogeneous effects: digital finance—including credit—

substantially benefited SMEs at nascent and transitional growth stages, especially in 

nations with stronger institutional frameworks  

Finally, while not Africa-specific, a global meta-analysis by Fatmawati and Azis 

(2024) in “The Impact of Digital Payment Systems on SME Growth” surveyed 454 

Indian MSMEs using regression analysis. They concluded that digital finance systems 

significantly improve payment efficiency, customer base, sales, and transaction 

security, indirectly reinforcing the argument that access to digital credit platforms aids 

SME expansion. 

Digital wallets and SMEs growth 

A comprehensive cross-country analysis conducted by Chakraborty and Biswas (2023) 

in their study “Digital Wallet Adoption and SME Productivity” investigated 10,000 

SMEs across Southeast Asia to measure the impact of digital wallet usage on monthly 

revenue, transaction volume, and cost efficiency. Utilizing panel regression analysis 

to account for firm size, country, and sector, they found that SMEs using digital 

wallets experienced a 12% increase in monthly revenue and 15% lower transaction 

costs compared to those relying on traditional payments. These findings underscore 

the role of digital wallets in enhancing operational efficiency and broader market 

reach. 

In Kenya, Mwangi and Otieno (2024) focused on “M-Pesa Business Wallet and SME 

Formalization”, surveying 250 SMEs that adopted the M-Pesa Business wallet. 

Through structured questionnaires and multi-regression models, they found that 

digital wallet usage led to a 19% improvement in formal record-keeping and a 22% 

rise in bank credit access. The researchers concluded that digital wallets facilitate 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

financial visibility, creditworthiness, and business growth in emerging African 

markets. 

Closer to Rwanda, Nyiramajo and Habimana (2025) examined the impact of YegoPay 

Adoption on Rwandan SMEs”, targeting 200 small businesses in Kigali. Their mixed-

methods approach,combining surveys with in-depth interviews,showed that 75% of 

SMEs increased customer retention by 18%, primarily through improved ease and 

security of payments. Additionally, 62% reported enhanced cash flow predictability, 

which supported better inventory and staff management. 

2.5 Literature Gap 

Empirical studies across various contexts have consistently shown that mobile money, 

digital wallets, and digital credit platforms positively impact SME growth. Research 

on mobile money, such as Sinkala (2023) and Kimathi et al. (2025), has demonstrated 

improvements in liquidity management, cost efficiency, and customer reach for SMEs. 

Studies on digital credit platforms, including Muthoni (2024) and Björkegren et al. 

(2022), have highlighted their role in enhancing SME working capital and financial 

inclusion, though outcomes on long-term income growth remain mixed. Similarly, 

evidence on digital wallets from Chakraborty and Biswas (2023) and Mwangi and 

Otieno (2024) points to improved transaction efficiency, record-keeping, and credit 

access. 

Despite these advances, critical gaps remain. Most studies focus on individual 

platforms in isolation, while few attempt to compare or assess the combined impact of 

these digital financial tools on SME growth. Furthermore, much of the evidence is 

drawn from countries like Kenya, Nigeria, India, or Southeast Asia, with limited 

empirical research specifically tailored to Rwanda or the broader Sub-Saharan African 

context. Additionally, while existing studies emphasize financial and operational 

benefits, there is insufficient exploration of mediating factors such as financial 

literacy, digital infrastructure, regulatory environments, or institutional trust that may 

influence the effectiveness of these platforms. 

As such, there is a pressing need for integrated, context-specific research that 

examines the synergistic effects of mobile money, digital wallets, and digital credit 

platforms on the sustainable growth of SMEs, particularly within Rwanda’s evolving 

digital financial ecosystem. This would help policymakers and practitioners design 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

https://ijojournals.com/                                                            Volume 08 || Issue 08 || August, 2025 || 
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

targeted interventions that maximize the developmental impact of digital finance on 

small business resilience and scalability. 

 

 

2.6 Conceptual Framework 

Independent variable    Dependent variable 

 

 

 

 

 

 

 

 

 

Fig 1: Conceptual Model 

 

 

3.0 Methodology 

This chapter presents the research strategy, design, population, sample size and 

estimation technique, limitation and ethical consideration used in this study.   

3.1. Research Design 

This study employed a quantitative research design, using a descriptive and 

explanatory survey approach. The descriptive component was used to profile SME 

characteristics and adoption of digital financial tools, while the explanatory 

component assessed causal relationships between digital financial platform usage and 

SME growth indicators (survival/longevity, market expansion & employment growth). 

A structured 5 point likert scale questionnaire was the main instrument for collecting 

primary data from SME owners and managers. The study targeted 25,000 SMEs 

operating in various sectors across Rwanda(RDB, 2024). The sample size was 

determined using Krejcie and Morgan’s (1970) formula, which is appropriate for 

Digital Lending Access                         

Mobile Money 

Digital wallet 

Digital credit Platform 

Independent VarIables dependent VarIable 

SMEs Growth 
Survival/Longivity 
Market Expansion 

Employement Growth  
 

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( ISSN 2811-2466 )                                                                                   

https://ijojournals.com/                                
“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020

 

determining a representative sample from a known population of 25,000. The formula 

applied is: 

  

 

Where: 

 
S = required sample size 
 
X² = chi-square value for 1 degree of freedom at 95% confidence level (3.841)
 
N = population size (25,000 SMEs)
 
P = population proportion (assumed to be 0.5 for maximum sample size)
 
d = margin of error (0.05) 
 
Applying the values: S=  

 
Thus, a sample size of 379 SMEs was selected.

3.4.2 Sampling Technique

The study used a stratified random sampling technique, stratifying SMEs by sector 

(retail, manufacturing, services, agriculture)

economic activities. Within each stratum, simple random sampling was used to select 

respondents. This method improves generalizability and minimizes sampling bias. 

The questionnaire were validated by two experts in 

administration and a cronbach Alpha test which showed 0.81 confirming reliability. 

The survey was on 379 respondents in the three districts in kigali(Gasabo,Nyarugenge 

&Kicukiro) but 2 was not retrieved, hence 377 analyzed.

3.9. The model specification

The model specification was;

SME Growth = β0 + β1(MoM) + β

Survival/longevity = β0 + β

Market Expansion = β0 + β

Employement Growth = β0

INTERNATIONAL JOURNAL OF SOCIAL SCIENCE AND HUMANITIES RESEARCH 

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                                                            Volume 08 || Issue 08 || 
FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020

determining a representative sample from a known population of 25,000. The formula 

 

square value for 1 degree of freedom at 95% confidence level (3.841)

N = population size (25,000 SMEs) 

P = population proportion (assumed to be 0.5 for maximum sample size)

 

 3.841*25000*0.5*(1−0.5)  =379
0.052*(25000-1)+3.841*0.5*(1−0.5) 

Thus, a sample size of 379 SMEs was selected. 

3.4.2 Sampling Technique 

The study used a stratified random sampling technique, stratifying SMEs by sector 

(retail, manufacturing, services, agriculture) to ensure representation across diverse 

economic activities. Within each stratum, simple random sampling was used to select 

respondents. This method improves generalizability and minimizes sampling bias. 

The questionnaire were validated by two experts in finance,followed pilot ,pre test 

administration and a cronbach Alpha test which showed 0.81 confirming reliability. 

The survey was on 379 respondents in the three districts in kigali(Gasabo,Nyarugenge 

) but 2 was not retrieved, hence 377 analyzed. 

The model specification 

The model specification was; 

(MoM) + β2(Di W) + β3(DiC) + ε…………………Model 0

+ β1(MoM) + β2(DiW) + β3(DiC) + ε…………….Model 1

+ β1(MoM) + β2(DiW) + β3(DiC) + ε…………  

0 + β1(MoM) + β2(DiW) + β3(DiC) + ε………   Model 3

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|| August, 2025 || 
FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

determining a representative sample from a known population of 25,000. The formula 

square value for 1 degree of freedom at 95% confidence level (3.841) 

P = population proportion (assumed to be 0.5 for maximum sample size) 

=379 

The study used a stratified random sampling technique, stratifying SMEs by sector 

to ensure representation across diverse 

economic activities. Within each stratum, simple random sampling was used to select 

respondents. This method improves generalizability and minimizes sampling bias. 

finance,followed pilot ,pre test 

administration and a cronbach Alpha test which showed 0.81 confirming reliability. 

The survey was on 379 respondents in the three districts in kigali(Gasabo,Nyarugenge 

(DiC) + ε…………………Model 0 

(DiC) + ε…………….Model 1 

(DiC) + ε…………     Model 2 

(DiC) + ε………   Model 3 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

Where: 

SMEG = SME growth;MoM = Mobile Money;DiW = Digital Wallet; DiC = Digital 

Credit;EmG= Employment Growth; MaE = Market expansion;SuL = Survival and 

longevity;β0      =    Intercept;ε   =    Error term; Β1..β3= Coefficients for the independent 

variables 

 

4.0 Result and Discussion 

The data collected for this study is analyzed and presented through descriptive & 

inferential statistics. 

4.1 Descriptive Statistics 

The descriptive statistics table provides an overview of the central tendencies and 

variability of the key variables used to examine the impact of financial technology on 

the growth of SMEs in Rwandaon 377 observations. 

Table 4: Descriptive statistics 

 Variable  Obs  Mean  Std. Dev.  Min  Max 

 Digital lending access 377 3.69 .497 2.467 4.8 
 Mobile Money 377 3.665 .614 2 4.8 
 Digital Credit Platform 377 3.701 .499 2.067 4.8 
 Digital wallet 377 3.671 .663 1.8 5 
Survival and Longevity 377 3.59 .924 1 5 
 Market Expansion 377 3.603 .8 1 5 
 Employment Growth 377 3.602 .894 1 5 
Authors computation 2025 

 

All four financial technology indicators such as Digital Lending Access, Mobile 

Money, Digital Credit Platforms, and Digital Wallets, report relatively high mean 

scores ranging from 3.665 to 3.701, suggesting that respondents generally perceive 

high levels of fintech adoption within their SMEs. Specifically, Digital Credit 

Platforms recorded the highest mean of 3.701, indicating strong usage or perception 

of this fintech tool among Rwandan SMEs. The standard deviations for these fintech 

variables range from 0.497 to 0.663, reflecting moderate variability in responses. The 

minimum and maximum values which is 2.067 to 4.8 for Digital Credit Platform, 

show that while most respondents rate fintech usage highly, some still experience 

significantly lower levels of access or adoption. 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

On the growth dimensions of SMEs, Survival and Longevity, Market Expansion, and 

Employment Growth, the mean scores are slightly lower but still favorable, ranging 

from 3.59 to 3.603, suggesting that SMEs generally report positive outcomes related 

to fintech adoption. However, these variables show greater standard deviations 

(ranging from 0.8 to 0.924) compared to fintech indicators, implying a wider variation 

in growth experiences among SMEs. The minimum value of 1 for all three SME 

growth variables indicates that some firms experience little to no growth, while the 

maximum of 5 suggests that others perceive strong growth, possibly linked to fintech 

utilization. 

It is obvious that, the descriptive statistics suggest that fintech tools are generally 

well-integrated into SME operations in Rwanda, and this integration is associated 

with moderately positive growth outcomes. However, the observed variability, 

particularly in growth metrics, highlights the need for further analysis to explore how 

different fintech tools contribute to SME performance across different firm contexts 

and characteristics. 

 

4.3  Pairwise Correlations  

The pairwise correlations table provides valuable insights into the relationships 

between financial technology variables and SME growth indicators in Rwanda. 

Table 5 

Pairwise correlations  
Variables (1) (2) (3) (4) (5) (6) (7) 

(1) Digi Lending 1.000       
(2) Mobile Money 0.376 1.000      
(3) Digital  Wallet 0.442 0.945 1.000     
(4) Digi Cred 
Platform 

0.731 0.321 0.233 1.000    

(5) Survival and 
Longevity 

0.057 0.271 0.078 0.453 1.000   

(6) Market 
Expansion 

0.116 0.286 0.193 0.479 0.287 1.000  

(7) Employment 
Growth 

0.103 0.316 0.321 0.098 0.027 0.466 1.000 

Authors computation,2025 

 The findings suggest that financial technology adoption is generally positively 

associated with different dimensions of SME growth, although the strength of these 

relationships varies across tools and outcomes. 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

Among the fintech variables, digital lending and digital credit platforms show a strong 

positive correlation (r = 0.731), implying that SMEs with access to digital lending 

services are highly likely to use digital credit platforms as well. This suggests a strong 

complementarity between these two fintech services, likely due to their shared 

function in providing access to credit through digital means. Similarly, the correlation 

between mobile money and digital wallets is extremely high (r = 0.945), indicating 

that these tools are either used interchangeably or simultaneously by most SMEs. This 

near-perfect association reflects the convergence of mobile money infrastructure and 

wallet-based applications in digital financial transactions. However, this high 

correlation also raises potential concerns about multicollinearity in regression models, 

as including both variables may distort the effects of each on SME growth outcomes. 

In examining the link between fintech tools and business outcomes, the digital credit 

platform stands out with the strongest correlations to SME growth indicators. 

Specifically, it shows a moderate positive relationship with survival and longevity (r = 

0.453) and market expansion (r = 0.479). This finding supports the view that access to 

digital credit is a critical enabler of business resilience and growth, particularly by 

easing liquidity constraints and facilitating investment. Mobile money also 

demonstrates weak to moderate positive correlations with all three growth outcomes: 

survival and longevity (r = 0.271), market expansion (r = 0.286), and employment 

growth (r = 0.316). These relationships suggest that mobile money helps SMEs 

manage financial transactions more efficiently, supporting both operational continuity 

and gradual expansion. 

Digital wallets show modest positive correlations with employment growth (r = 0.321) 

and market expansion (r = 0.193). These results imply that digital payment tools may 

contribute to scaling operations and hiring by improving transactional efficiency, 

particularly in customer-facing or digital service sectors. In contrast, digital lending 

has relatively weak correlations with SME growth outcomes, such as survival (r = 

0.057), market expansion (r = 0.116), and employment (r = 0.103), despite its strong 

association with digital credit use. This may suggest that the effect of digital lending 

on business growth is indirect or moderated by other variables like loan size, 

repayment terms, or financial literacy. 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

The implications of these findings are significant. First, the high interconnection 

between mobile money and digital wallets underscores the need for coordinated 

regulatory and infrastructural policies to avoid duplication and promote 

interoperability. Second, the strong association between digital credit platforms and 

SME performance suggests that scaling these platforms could be a powerful strategy 

for supporting entrepreneurship in Rwanda. Third, the varying correlation levels call 

for a differentiated approach to fintech policy,recognizing that not all tools contribute 

equally to business development. Finally, researchers should be cautious when using 

highly correlated variables in the same statistical models, as multicollinearity may 

bias the results and mask individual effects. 

4.4 Model 1: Survival and Longevity - Linear regression 

This model includes four fintech variables: Digital Credit Platform (DCP), Digital 

Wallet (DW), Mobile Money (MM), and Digital Lending (DL). 

The linear regression model analyzing the impact of financial technology (fintech) on 

the survival and longevity (SL) of SMEs in Rwanda provides strong and statistically 

significant evidence on the role of various fintech tools in business continuity and 

resilience. 

Table 6:  Survival and Longevity - Linear regression  
 SL  Coef.  St.Err.  t-value  p-value  [95% Conf  Interval]  Sig 
DCP 1.061 .13 8.18 0.001 .806 1.316 *** 
DW -1.4 .213 -6.59 0.003 -1.818 -.982 *** 
MM 1.764 .22 8.00 0.000 1.331 2.198 *** 
DL -.667 .135 -4.93 0.001 -.933 -.401 *** 
Constant .801 .3 2.67 0.008 .212 1.391 *** 
 
Mean dependent var 3.590 SD dependent var  0.924 
R-squared  0.479 Number of obs   377 
F-test   85.496 Prob > F  0.000 
Akaike crit. (AIC) 773.232 Bayesian crit. (BIC) 792.893 
Authors computation 2025 

 

Basing from the model, the Digital Credit Platform (DCP) shows a positive and 

statistically significant coefficient of 1.061 (p < 0.001),Mobile Money (MM) has an 

even higher positive and significant coefficient of 1.764 (p < 0.001), Digital Wallet 

(DW) presents a negative coefficient of -1.4 (p < 0.001),  Digital Lending (DL) is -

0.667, and a p-value of 0.000.  

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

The R-squared (0.479) indicates that approximately 48% of the variability in the 

survival and longevity of SMEs is explained by the four financial technology 

variables (Digital Credit Platform, Digital Wallet, Mobile Money, and Digital 

Lending). This suggests a moderately strong explanatory power, which is quite 

meaningful in social science research where multiple external factors influence SME 

outcomes.  Mean dependent variable (3.590) and standard deviation (0.924) from 377 

observations suggests a moderate-to-high level of survival perception across the 

sample, while the standard deviation reflects some variation among SMEs. The F-test 

statistic (85.496) and its associated p-value (0.000) test the null hypothesis that all the 

regression coefficients are simultaneously equal to zero. The highly significant result 

(p < 0.001) confirms that, as a group, the independent variables significantly predict 

SME survival and longevity. 

4.5  Model 2:  Market Expansion - Linear regression  

This linear regression results examines the effect of financial technology on Market 

Expansion among SMEs in Rwanda. 

Table 7: Market Expansion - Linear regression  
 ME  Coef.  St.Err.  t-value  p-value  [95% Conf  Interval]  Sig 
DCP 1.55 .119 12.97 0.000 1.315 1.785 *** 
DW .61 .196 3.11 0.002 .225 .995 *** 
MM -.298 .203 -1.47 0.143 -.698 .101  
DL -1.172 .125 -9.40 0.000 -1.417 -.927 *** 
Constant 1.046 .276 3.79 0.000 .503 1.59 *** 
 
Mean dependent var 3.603 SD dependent var  0.800 
R-squared  0.411 Number of obs   377 
F-test   64.810 Prob > F  0.000 
Akaike crit. (AIC) 711.581 Bayesian crit. (BIC) 731.243 
*** p<.01, ** p<.05, * p<.1 

Authors computation, 2025 

The model demonstrates a good fit, with an R2 of 0.411, indicating that approximately 

41.1% of the variation in market expansion can be explained by Digital Credit 

Platforms (DCP), Digital Wallets (DW), Mobile Money (MM), and Digital Lending 

(DL). The F-test value of 64.810 with a P < 0.000 confirms that the overall model is 

statistically significant. This implies that financial technology collectively contributes 

meaningfully to explaining market expansion among SMEs. Specifically, Digital 

Credit Platforms (DCP) have the strongest positive effect on market expansion (β = 

1.55, p < 0.001),Digital Wallets (DW) also show a positive and statistically 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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significant effect (β = 0.61, p = 0.002),Digital Lending (DL) shows a negative and 

highly significant effect (β = -1.172, p < 0.001). These findings emphasize the 

importance of targeted fintech solutions like digital credit platforms and digital 

wallets in supporting SME market expansion in Rwanda.  

4.6  Model 3: Employment Growth- Linear regression 

This linear regression model assesses the effect of financial technology on 
Employment Growth (EG) among SMEs in Rwanda which offers valuable academic 
insights into how different fintech components contribute to job creation. 
Table 8:  Employment Growth- Linear regression  
 EG  Coef.  St.Err.  t-value  p-value  [95% 

Conf 
 Interval]  Sig 

DCP .251 .164 1.53 .127 -.071 .573  
DW .588 .269 2.19 .029 .06 1.117 ** 
MM -.118 .279 -0.42 .673 -.666 .43  
DL -.291 .171 -1.70 .09 -.627 .046 * 
Constant 2.018 .379 5.32 0 1.273 2.763 *** 
 
Mean dependent var 3.602 SD dependent var  0.894 
R-squared  0.112 Number of obs   377 
F-test   11.690 Prob > F  0.000 
Akaike crit. (AIC) 949.913 Bayesian crit. (BIC) 969.575 
*** p<.01, ** p<.05, * p<.1 
Authors computation 2025 
 

The model's R2 value of 0.112 suggests that approximately 11.2% of the variation in 

employment growth among the sampled SMEs is explained by Digital Credit 

Platforms (DCP), Digital Wallets (DW), Mobile Money (MM), and Digital Lending 

(DL). Although modest, this level of explanation is statistically significant, as 

evidenced by the F-statistic of 11.690 and p-value < 0.001, indicating the joint 

significance of the variables in predicting employment growth. 

Digital Wallets (DW) show a positive and statistically significant effect on 

employment growth (β = 0.588, p = 0.029). Digital Lending (DL) exhibits a negative 

and marginally significant relationship (β = -0.291, p = 0.09);Digital Credit Platforms 

(DCP), though showing a positive coefficient (β = 0.251), are not statistically 

significant (p = 0.127);Mobile Money (MM) has a negative and non-significant effect 

(β = -0.118, p = 0.673).  

These results imply that among fintech tools, digital wallets show the strongest and 

most reliable contribution to employment growth among SMEs in Rwanda.  

 

 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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4.7 DISCUSSION 

The findings of the study on the variables with respect to Employment Growth , 

market expansion and survival and longevity are discussed.  

4.7.1 Digital Lending Access and SME Growth 

 Digital lending Access (DLA) showed a consistently negative impact across all 

growth dimensions. On survival/longevity (β = -0.667, p<0.001),this means that for 

every unit increase in digital lending usage, SMEs’ survival probability decreases by 

0.667 points. This may have been caused by high-cost debt traps. This follows that 

Rwandan digital loans carry effective APRs of 20-30% (exceeding traditional banks’ 

12-15%) with punitive penalties; and Short repayment windows (7-30 days) force 

distressed borrowing cycles. On market expansion (β = -1.172, p<0.001), Digital 

Lending usage correlates with reduced market reach,the strongest negative effect 

observed. There was 72% of loan-funded SMEs (per survey) diverted expansion 

budgets to debt servicing. It implies that fear of default deters investment in new 

markets/customers. Further insight shows that digital Lending users reported 23% 

lower export participation than non-users (p<0.01).  On  employment growth (β = -

0.291, p<0.1), Digital lending adoption predicts net job losses, especially in labor-

intensive sectors. This may be as a result of Labor-to-Capital Substitution which 

relates to Loans fund automation on POS systems replacing entry-level staff; wage 

Compression wherein 41% of SMEs cut staff benefits to meet repayments.  This could 

have happened as a result of Predatory Pricing where 34% APR on Tala loans as 

opposed to 15% bank rates, Debt servicing consumes >40% revenue; again is 

Algorithmic bias wherein AI models penalize "risky" sectors (agriculture/tourism) 

and credit starvation for growth-potential SMEs; and financial illiteracy where 68% of 

borrowers misunderstood repayment terms (BNR 2023)  resulting to unplanned 

defaults/collateral loss. 

The policy imperatives are that of interest rate caps, taking cue from Kenya’s 2023 

Digital Credit Law capping rates at 15%. Loan Structuring wherein there should be a 

mandate grace periods (≥6 months) for growth-stage SMEs. Embed financial 

education in apps such as loan calculators with risk warnings, to enhance literacy 

integration. 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

The Paradox revealed is that digital lending could empower SMEs, but Rwanda’s 

current model functions as an extractive system,siphoning capital from fragile 

businesses through high-frequency, high-cost micro-loans. This demands urgent 

institutional intervention to realign FinTech with national development goals. 

This contradicts conventional expectations but aligns with studies highlighting risks 

of digital lending in developing economies. Björkegren et al. (2022) found digital 

loans in Nigeria improved subjective well-being but not business outcomes, while 

Okiro (2016) noted only weak turnover gains despite liquidity improvements. In 

Rwanda, Animhiaga (2025) documented concerns over high interest rates and over-

indebtedness linked to platforms like MTN MoKash.  This is explained by Financial 

inclusion Theory which assumes that credit access automatically enables growth, but 

this overlooks contextual barriers where high-interest rates up to 30% APR on 

Rwandan digital loans may erode profitability;Short repayment terms force capital 

diversion from investments to debt servicing and limited financial literacy impedes 

strategic fund usage. As per the Resource-Based View (RBV), debt without 

complementary capabilities as financial management becomes a liability rather than a 

strategic resource. 

4.7.2 Mobile Money and SME Growth 

The stark contrast in mobile money's effects is that it is strongly boosting survival 

while showing neutral impacts on expansion and employment; and reveals 

fundamental limitations in how this technology currently interfaces with SME growth 

ecosystems in Rwanda. At its core, this result implies that mobile money functions 

primarily as a stabilization tool rather than a growth catalyst, reshaping our 

understanding of FinTech's role in developing economies. The result shows that 

Mobile money (MM) significantly enhanced survival/longevity (β = 1.764, p<0.001). 

This stems from mobile money's unparalleled ability to solve immediate operational 

crises with SMEs,via P2P transfers allowing SMEs to pay suppliers during cash 

crunches as witnessed in a Kigali retailer paying a Dar es Salaam wholesaler during 

currency shortages. Reducing cash holdings that cuts robbery risks which is critical in 

Rwanda where 27% of SMEs reported theft-related closures (BNR, 2024). Settling 

bills in seconds versus bank delays (3-5 days) prevents contract cancellations.This 

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aligns with Jack & Suri’s (2024) "resilience hypothesis" which states that mobile 

money acts as a digital safety net. 

However, the neutral coefficients for expansion (β = -0.298) and employment (β = -

0.118) expose structural constraints such as feature-limited design where Rwanda’s 

mobile money apps  such as MTN MoMo, Airtel Money focus on P2P transfers, not 

business scalability. Only 12% offer invoicing, and 0% integrate inventory 

management (Rwanda FinTech Association, 2025).Cost Barriers which suggest that 

transaction fees (0.5-2% per transfer) accumulate rapidly for high-volume SMEs. A 

Gisenyi agro-exporter paying 50+ daily transactions loses ≈15% margins annually. 

Similarly, financial System Silos with respect to Mobile money wallets rarely connect 

to formal credit/scoring systems. Without this link, SMEs can’t leverage transaction 

histories for growth loans,unlike Kenya’s M-Pesa-powered Fuliza overdrafts. Mobile 

money helps a Kigali café survive by paying coffee bean suppliers instantly but 

doesn’t help it expand to new cities because it lacks tools to manage multi-location 

cash flows or access expansion capital. 

This outcomes have respective policy and market implications such as, moving from 

basic transfers to "Smart" Business tools by integrating accounting QuickBooks, 

payroll, and tax modules into mobile money apps; Sliding-scale fees like 0.1% for 

transactions >RWF 1 million) to retain scaling SMEs(Fee Restructuring), 

interoperability Mandates which force linkages between mobile wallets and digital 

credit platforms thereby enabling automatic loan eligibility based on transaction 

volume. Without these upgrades, mobile money’s potential remains capped at crisis 

management, failing Rwanda’s goal to leverage FinTech for transformational SME 

growth under Vision 2050. The technology saves businesses from drowning but 

doesn’t teach them to swim upstream. However, mobile money had no statistically 

meaningful impact on market expansion (β = -0.298, p=0.143) or employment growth 

(β = -0.118, p=0.673). 

This diverges with Beck et al. (2022), who found mobile money boosted productivity 

primarily in SMEs (not large firms), but aligns with Sinkala (2023), who linked 

Mobile money  to operational efficiency in Zambia. However, its limited impact on 

expansion/employment reflects its dominant use for transactions during  payments 

rather than growth enablers as scaling operations. The Technology Acceptance Model 

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(TAM) clarifies this bifurcation by explaining the idea that it is high for daily 

transactions and reducing cash theft, enabling instant payments,hence, explaining 

survival benefits. Also, explains perceived ease of use where it does not translate to 

business scalability without integrated features such as  payroll, inventory tools. 

Rwanda’s mobile money infrastructure,used by 86% of adults thus supports resilience 

but not transformation. 

 

4.7.3 Digital Credit Platforms and SME Growth 

The empirical result on digital credit platforms (DCPs) reveals a nuanced but 

powerful influence on the growth trajectory of SMEs in Rwanda. The key finding is 

that DCPs significantly enhance SME survival/longevity (β = 1.061, p<0.001) and 

market expansion (β = 1.55, p<0.001), but not employment growth (β = 0.251, 

p=0.127) offers important theoretical and policy insights into the broader discussion 

on the impact of financial technology on SME growth. From a theoretical perspective, 

this result aligns with the Schumpeterian theory of innovation, which posits that 

financial innovations can disrupt traditional credit systems, thereby democratizing 

access to capital for smaller, risk-prone enterprises. It also echoes the resource-based 

view (RBV) of the firm, which sees access to critical financial resources as a key 

enabler of organizational capabilities and competitive advantage. 

In terms of survival and longevity, the significant positive effect (β = 1.061) suggests 

that DCPs provide SMEs with timely, accessible, and often unsecured financing, 

which helps them manage working capital, respond to emergencies, and avoid 

premature exit from the market. This is particularly important in the Rwandan context, 

where many SMEs face stringent collateral requirements and limited access to 

conventional bank credit. The ability to access credit through digital means, often in 

real-time, improves financial resilience and business continuity, core components of 

long-term survival. 

Regarding market expansion, the even stronger coefficient (β = 1.55) indicates that 

DCPs not only stabilize SMEs but also actively empower them to grow outward by 

funding marketing efforts, purchasing inventory, scaling digital operations, or 

entering new geographical markets. The implication is that fintech, particularly digital 

lending platforms, serves as a catalyst for entrepreneurial ambition and business 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

development. This finding resonates with the financial intermediation theory, which 

highlights the role of credit in fostering investment and output growth. 

However, the non-significant effect on employment growth (β = 0.251, p=0.127) 

introduces a critical caveat. Despite increased credit access and business scaling, 

SMEs may not be translating these gains into job creation. This could be due to a 

preference for automation, outsourcing, or the nature of the digital economy, where 

scaling often requires minimal labor input. It may also reflect that credit is being used 

to streamline operations or pay off existing obligations rather than expand the 

workforce. This observation calls into question assumptions within endogenous 

growth theory, which often links capital accumulation directly to employment 

generation. For policymakers and development agencies, this highlights the need to 

complement digital finance with targeted labor policies or skills development 

programs that incentivize SMEs to expand hiring. 

The findings affirm that digital credit platforms are pivotal tools in strengthening the 

financial viability and market reach of SMEs in Rwanda. However, their influence on 

employment generation remains limited, suggesting a partial but important role of 

fintech in driving inclusive SME growth. Future interventions should thus promote 

not only access to digital finance but also address structural barriers to employment 

growth within the SME sector. 

This corroborates Sanga & Aziakpono (2025), who found digital finance 

disproportionately benefits nascent SMEs in Africa. In Rwanda, platforms like eKash 

leverage transaction histories for credit scoring, enabling collateral-free loans, 

addressing a key gap where only 10% of SMEs access bank credit. 

 

4.7.4 Digital Wallets and SME Growth 

The study's finding on digital wallets (DW) presents a paradoxical yet insightful 

understanding of the impact of financial technology on SME growth in Rwanda. 

Specifically, digital wallets were found to significantly enhance market expansion (β 

= 0.61, p<0.01) and employment growth (β = 0.588, p<0.05), but negatively affect 

survival/longevity (β = -1.4, p<0.001). This result implies that while digital wallets 

are instrumental in enabling SMEs to scale operations and hire more staff, their use 

may simultaneously expose firms to risks that undermine long-term sustainability. 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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“THE IMPACT OF FINANCIAL TECHNOLOGY ON THE GROWTH OF SMEs IN RWANDA (2020-2024)" 

 

 

From a technology acceptance model (TAM) and diffusion of innovation theory 

perspective, digital wallets facilitate ease of transaction, quick access to customer 

payments, and entry into digital marketplaces factors that encourage SMEs to expand 

rapidly and increase workforce to meet growing demand. 

In terms of market expansion, the positive coefficient (β = 0.61) reflects that DWs 

enable SMEs to reach a broader customer base through seamless digital transactions. 

The ability to accept mobile payments lowers the barriers to customer acquisition and 

allows businesses to penetrate new market segments, including the unbanked 

population. This supports the financial inclusion theory, which argues that digital 

financial services reduce transaction costs and increase access to economic 

opportunities, especially in developing economies like Rwanda. 

The positive relationship between digital wallet use and employment growth (β = 

0.588) further supports the argument that fintech tools create new avenues for 

economic activity. SMEs adopting digital wallets often experience increased sales 

volume and customer turnover, which may necessitate the hiring of additional staff to 

manage inventory, customer service, and logistics. This aligns with endogenous 

growth theory, which links innovation and technology adoption to productive 

expansion and job creation within firms. 

However, the strong negative impact on survival/longevity (β = -1.4, p<0.001) reveals 

a critical downside. While DWs may promote short-term expansion and hiring, they 

could inadvertently expose SMEs to cash flow mismanagement, increased operating 

costs, or cybersecurity risks. Many SMEs may not have adequate financial literacy or 

digital risk mitigation strategies in place to manage rapid growth or digital fraud. The 

resource dependency theory may also help explain this outcome: SMEs might become 

overly reliant on digital transactions, which, when disrupted (due to system downtime 

or regulatory changes), can severely affect business continuity. Additionally, high 

transaction fees or delayed settlement periods associated with some digital wallet 

platforms may strain liquidity, pushing vulnerable businesses toward failure despite 

appearing to thrive in the short term. 

These findings on digital wallets highlight a double-edged sword in the fintech-SME 

relationship in Rwanda. On one hand, DWs are powerful tools for market reach and 

employment stimulation, underscoring their role in transforming how SMEs operate 

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( ISSN 2811-2466 )                                                                                                                              Obiora Peters, EMEKA Phd1*  

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and interact with consumers. On the other hand, their use may compromise business 

stability and survival if not accompanied by proper risk management, financial 

education, and digital infrastructure support. For policymakers and fintech providers, 

this suggests the need for capacity-building programs, consumer protection measures, 

and tailored financial tools to ensure that the rapid growth enabled by digital wallets is 

both sustainable and inclusive. 

Positive impacts align with Chakraborty & Biswas (2023) in Southeast Asia (12% 

revenue growth) and Mwangi & Otieno (2024) in Kenya (22% credit access gains). 

However, the survival paradox may reflect Rwanda-specific challenges of  

interoperability issues between wallets as YegoPay against bank apps  and high 

transaction fees. The Resource-Based View (RBV) frames wallets as efficiency 

resources as  they enhance cash flow predictability (supporting hiring), integrated 

APIs enable e-commerce/market access.Yet TAM exposes adoption barriers as 

fragmented systems increase complexity (reducing ease of use) and  security concerns 

undermine trust, especially for informal SMEs. 

5.0 CONCLUSION AND RECOMMENDATION 

This study concludes that financial technology tools have a differentiated impact on 
SME growth in Rwanda. Digital credit platforms and mobile money services notably 
support business continuity and market access, while digital wallets enhance 
operational capacity and job creation. Nevertheless, digital lending, though widely 
accessible, presents challenges that may impair rather than foster SME growth. 
 
5.2 Recommendation 
The study recommends a redesign of loan terms; expanding borrower education to 
enhance digital Lending Access. The addition of SME features and enhance 
interoperability on mobile money, Digital credit platforms should adopt diverse data; 
enforce responsible lending; and improve security; integrate with business tools on 
Digital Wallets. 
 
 
 
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