BNR says Rwanda’s financial inclusion on the rise

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By Kwizera Arnold

National Bank of Rwanda (BNR) governor John Rwangombwa.

National Bank of Rwanda (BNR) governor John Rwangombwa.

Rwanda central bank says financial inclusion in Rwanda is on the rise, a factor attributed to the increased number of commercial bank branches and banking agents in various parts of the country.

According to the second annual monetary policy and financial stability statement more Rwandans are gaining access to financial services thus more financial inclusion

According to statistics released by the central bank governor John Rwangobmwa adult financial inclusion currently stands at 89% up from 72% in 2012 a factor attributed to the increased number of commercial bank branches and banking agents in various parts of the country.

“ATMs, mobile money accounts have been major contributors as more people move away from traditional money keeping methods to banks and other financial institutions,” said the national bank of Rwanda (BNR) governor.

The banking sector continued to be the biggest beneficiary of this financial inclusion with total assets of the banks growing by 13.9%.  In the first half of the year from Frw 2.0 trillion in 2015 to Frw 2.3 trillion at the end of the second quarter of this year. Loans account for 60% of the total assets of the banks.

This growth in the sector has been attributed to the low loan rejection applications experienced  lately in the sector with the current liquidity ratio standing at 42.8% down 49.5% in June last year.

But some financial experts are divided regarding the issue with some stating that the few rejected applications is an indicator in the declining confidence to acquire loans by the business sector due to prudent conditions from the banks.

“It is becoming harder for the lay money to acquire loans as banks tend to ask for collateral that many young entrepreneurs and ordinary businessmen do not possess,” said Richard Nkusi a business analyst with Think Africa financial group.

But the bankers seem to differ with many citing improved monitoring of loans and supervision having helped the sector, “ we are actually receiving more loans applications than before and enabling access to these loans,” said Kenneth  Agutamba from Bank of Kigali.

Despite recent capital buffers from the central bank as a measure to re-assure depositors, non-performing loans of the commercial banks increased to 7.0% at the end of the first half of the year from a previous 5.9% at the same time last year.

Despite this, microfinance institutions continued to be the biggest lenders accounting for 33.9% of the credit that has been mainly given to commerce, restaurants and hotels.

But this improvement has been overshadowed by the increasing non-performing loans in the SACCOS which now stands at 12.5% in June 2016 from a previous 8.5% in June 2015 a factor attributed to recent improved supervision on the sector.

“Although SACCOs are a great initiative, mismanagement is hampering the industry due to weak staff with majority of the elected organs lacking the qualified personnel to run these institutions,” said Governor John Rwangombwa in regard to the increased non-performing loans in the sector.

Interestingly majority of the loans granted by the UMURENGE SACCOs has been to the agricultural sector which has received 30.5% of this credit amounting to Frw 10.5 billion attributed to the rural base of these institutions.

 

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