Factors Influencing the Financial Performance of Medium Enterprises in Rwanda - A Case Study of Sosoma Industry

Most SMEs in the country lack the capacity in terms of qualified personnel to manage their activities, fund, access to market and lower level of technology. Another issue has to do with the inadequate capital base of most SMEs in the country to meet the collateral requirement by the banks before credit is given out. Researcher was examined the factors influencing the financial performance of medium enterprises in Rwanda. . Descriptive research design was used in this study to establish whether there is a relationship between factors influencing the financial performance of medium enterprise in Rwanda. In line with this research, the target population is 21 people composed by stakeholders' and staffs of SOSOMA industry. In this study, data collected through self administered questionnaires and documentation technique. Factors influencing the financial performance have an overall correlation with SMEs performance of SOSOMA industry, 0.762 is significant at 5%. These indicate good fit of the regression equation used. Analysis of Variance shows that f-calculated is greater that f ? critical that is 5.221greater than0.00. This implies that the regression equation was well specified and therefore the co-efficient of the regression shows that there is a strong relationship between two variables. The analysis of variance of the predictors of the model is significance at 0.000. Results indicate that access to finance is the most significant in explaining the financial performance with a significance at 0.000 which is less that a p-value of 0.05 and beta value is 0.824. The results revealed that access to finance plays a major role in the financial performance of SOSOMA industry and access to finance continues to be a major problem that SMEs face in their operations. After analysis, it is suggested that SOSOMA industry should incorporate good financial management practices such as preparation and usage of financial information in their operations, preparation of business plan, and the well using of working capital management. Government of Rwanda should be directly involved to help eliminate the financing gap faced by SMEs through direct government interventions through public banks, credit guarantee schemes and other forms of subsidized financing. Most of time interest rates have locked out SOSOMA industry as only large scale borrowers who expect higher returns can bear the high cost of borrowing, the researcher recommends that financial institutions have create special lending structures for this category of SMEs.