Households’ Determinants of Demand for Financial Credits in the City of Bukavu

Abstract

In the DRC and particularly in the Bukavu city (It is the capital of the province of South Kivu. It is located 180 km from Goma by lake and 207 km by road (DRC, Ministry of Planning, PRSP Process Steering Unit, 2005a), 1650 km from Kinshasa (capital of the DRC) as the crow flies, 120 km from Uvira by road and 15 km by road only from Kamembe (Rwanda). It is a city that extends over 60 Km2 with a population growth rate of 3.3% per year. It is located in the Eastern Valley of the Graben, specifically the Great Lakes region at 2°30'S and 28°50'E. The city is lucky to have a rainy climate for more or less 8 months (September-mid-June). The average temperature rarely exceeds 20° in Bukavu. It is weighted by the presence of Lake Kivu.The rainfall amounts to 1320 mm at 1670 m altitude. According to the report of the Bukavu City Council of 2013, the population of Bukavu city is estimated at 718,210), there is a growing proliferation of financial institutions, especially microfinance institutions (MFIs), which by definition have the main mission to fight against poverty by offering financial services (including loans) even to the poorest people who do not have access to formal financial services. The main concern of this work is to highlight the different factors that could influence the behavior of households in Bukavu to ask for financial credit. This work is limited to the Bukavu city and data were collected from 147 household heads. To analyze the data, the Lesser Ordinary Square Model was used with dependent variable (the amount of credit) and independent variables (the income of the household head, the household size, the interest rate, the reimbursement deadline, assessment of the guarantees requested, credit information, sex of the household head, age of the household head, marital status of the household head, education level of the household head). The model selected explained to 57.6% (R²) the amount of credit requested which is the dependent variable. The results of the econometric analysis show that it is the income, repayment term, study level and gender variables that significantly explain the amount of credit requested by households in Bukavu. All of these variables have a positive influence on the credit amount. The result obtained from this analysis was that households requested more loans from MFIs (85.4%) than from banks (15.6%). It was noted that households in Bukavu allocate more credits to investment (80.2%) than consumption (29.8%).