Effect of Financing Sources on Performance of Selected Small and Medium Enterprises in Gasabo District, Rwanda
Thomas Bizimungu and Tarus Thomas
University of Kigali
Email: muthomas3@gmail.com
Abstract: This study examined the effect of financing sources on the performance of selected Small and Medium Enterprises (SMEs) in Gasabo District, Rwanda. Specifically, the study assessed the effect of Angel Investors on the Performance of SMEs in Gasabo District. The study adopted a descriptive and correlational research design using a quantitative approach. The target population comprised 4,866 SMEs, from which a sample size of 369 respondents was determined. Data were collected using structured questionnaires and analyzed using SPSS. Descriptive statistics, Pearson Product-Moment correlation analysis, and simple linear regression analysis were used to examine the relationship and effect of Angel Investors on the Performance of SMEs. The findings showed that angel investors provide financial support to SMEs, support business growth, and consider the potential and performance of businesses when making investment decisions. The findings also indicated that access to regular investment from angel investors remains a challenge for some SMEs. The correlation analysis indicated a strong positive relationship between Angel Investors and the Performance of SMEs (r = .792, p < .001). Regression analysis further showed that Angel Investors significantly influenced the Performance of SMEs, explaining 75.7% of its variation. The study concluded that Angel Investors play an important role in improving the Performance of SMEs in Gasabo District, Rwanda. The study recommends strengthening the accessibility and availability of angel investors, improving SMEs’ investment readiness, and establishing stronger connections between SMEs and potential angel investors to support business growth and improve SME performance.
