Effect of Digital Automation on Operational Efficiency of Microfinance Institutions: A Case Study of District SACCO Nyarugenge, Rwanda

Jean Pierre Bizimana and Tarus Thomas
University of Kigali
Email : bizpeter2020@gmail.com

Abstract: This study examined the effect of digital automation on the operational efficiency of microfinance institutions, with specific focus on the effect of IT investment ratio on operational efficiency at District SACCO Nyarugenge, Rwanda. The study employed a descriptive and correlational research design within a mixed-methods case-study approach. The target population comprised 84 employees of District SACCO Nyarugenge, and all 84 employees participated in the quantitative survey. Data were collected using a structured questionnaire and documentary review of institutional records and were analyzed using descriptive statistics and Pearson correlation analysis. The findings showed that respondents generally agreed that IT investment was well established at the SACCO, with a composite mean of 4.24 (SD = 0.66). IT support staff being sufficient and competent recorded the highest mean (M = 4.82, SD = 0.71), while increased IT capital investment reducing operational expenses recorded the lowest mean (M = 3.30, SD = 0.76). Pearson correlation analysis revealed a strong positive and statistically significant relationship between IT investment ratio and operational efficiency (r = .736, p < .001). The studyconcludes that IT investment is positively associated with operational efficiency at District SACCO Nyarugenge, particularly through improved system reliability and service delivery. However, the direct translation of IT investment into cost reduction remains comparatively weak. The study recommends strengthening IT investment planning, continuous digital skills development, and the integration of technology investments with process-level cost-reduction measures to maximize operational efficiency.