A new fund intended to foster savings culture and investment as well as mobilise resources domestically to spur economic growth is due for launch today.

The ‘Iterambere Fund’ is one of the initiatives that Rwanda National Investment Trust Ltd (RNIT Ltd) has come up with.

The launch will be presided over by Prime Minister Anastase Murekezi.

The Government, through the Ministry of Finance and Economic Planning, established RNIT Ltd, licenced by the Rwanda Capital Market Authority (CMA) to promote and manage funds, including unit trusts.

The Initial Public Offering (IPO) will last two months.

In this period, the Fund management will conduct awareness about its services as well as mobilise investments.

A unit will be sold at Rwf100. However, the minimum investment in the Fund is Rwf2,000 and there is no ceiling for investments.

The Fund will be working with commercial banks and stockbrokers in a bid to help investors.

The Fund has two options: income option (with minimum investment of Rwf100,000) and Growth option (minimum investment of Rwf2,000), with no maximum limit.

Income is distributed depending on the investors’ options. For instance, those who opt for growth option are not entitled to income distribution and the income earned from investments of such unit holdings would automatically be re-invested by the Fund.

Those who opt for income option will receive their respective income distribution.

Investors may redeem their units or buy more from the fund on an ongoing basis based on their liquidity needs.

The scheme is open for investment to Rwandans, East African Community nationals (both retail and institutional) investors and international institutional investors within the permissible legal framework.

An investor also has the right to withdraw their invested money any time they want based on their needs. 

"The longer you leave your money invested, the greater the opportunity for wealth creation as the money is put to use to earn more money,” the Fund said in a statement.

Dieudonné Ngirimana, administration and accounting manager at RNIT, told The New Times last week that the Fund intends to promote both savings culture and investment-for-returns as there are Rwandans who save only for consumption purposes. 

"It is not possible for a person having Rwf2,000 to open a deposit account in a bank as that would require minimum Rwf20,000 or Rwf100,000. Again, that money cannot buy a bond because the minimum is Rwf100,000. So, this Fund seeks to help people with small income access financial products and the benefits that come with them,” he said.

"If we buy a government bond for 15 years, with 13.5 per cent interest rate, each investor will get that interest regardless of the amount of money they invested. That is why they are called collective investment funds,” Ngirimana added.

Savings culture

The FinScope Rwanda 2016 Survey, which estimated a total population of at least six million adults in Rwanda, shows that about 86 per cent of adults (around 5.1 million individuals) save, including all forms of savings.

The report also indicates that saving through formal institutions was at 49 per cent, implying an increase of 13 per cent from 36 per cent in 2012.

The uptake in formal savings is driven by savings at Umurenge SACCOs (27 per cent) and mobile money savings, at 17 per cent.

"People in Rwanda mainly save to pay for living expenses (in times of hardship),” the survey says.In addition, the report said, about 11 per cent of adults in the country (around 0.7 million individuals) do not use any financial products or services (neither formal nor informal) to manage their financial lives, that is, they are financially excluded.

Ngirimana said Iterambere Fund is also expected to offer benefits of economies of scale.Moreover, he noted, the Fund would also help tackle probable external shocks to the country’s economy."Through domestic mobilisation, we can buy bonds and the Government gets the money to use on important projects such as roads and hospitals. Again, the Government will bring the money back to the Fund with interest. So, the investor benefits twice: on public infrastructure and interest on bonds,” he said.

It will also help companies get funds for major transactions which would help spur economic development.

"If a company listed at the Capital Market Authority has major projects and has made investment analysis and choice but has no money to implement such projects,-as in capital rationing- they will put bonds on the market and we buy them, then they will get the money to implement the projects,” Ngirimana said.

In so doing, the company, the country and the people who invested in the Fund will benefit, he added.

To avoid risks associated with investing in a unique financial product, the Fund will opt for product diversification, including equities, treasury bonds and bills, money markets (bank terms and deposits).

However, Ngirimana said they will only venture investors’ money into financial instruments for companies that are listed on the Capital Market as they have regular reports for their financial performances, an aspect he said is in line with ensuring the security and protection of their money.

The average for interest rates made on various financial product investments will be considered while offering interest to the fund unit holders every year.

Bernard Nsengiyumva, a resident of Gasabo District, said saving and making investments is fundamental for one’s future safeguards and development.

"Nowadays keeping money anywhere without investment for a return is akin to the past practices when people kept money in cow horns and gradually diminished with no interest at all. Actually, this is amounts to a loss. We need such a fund as it will help those who cannot afford the already existing financial products embrace the culture of saving, make profits and develop,” he said. 

CMA executive director Robert Mathu told The New Times that the move is important in the development of the capital market in the country.

"It is going to be the first collective investment scheme whereby we will have funds for investment mobilised from many investors and this Fund will be professionally managed instead of having each and every single small investor looking for an investment manager,” Mathu said.

"They will all be sharing professional investments and this will kick-start fund management industry in the country, which is important so that members of the public have access to ways of accumulating their capital and savings for investment for long-term.”

The Fund will have RNIT as the investment manager; the National Bank of Rwanda, as the custodian – to keep the scheme’s assets, supervise and monitor the regulatory compliance of the Fund transactions on behalf of the unit holders – and Board of Trustees, which will be responsible for overseeing its operations and the benefits of the investors.

editorial@newtimes.co.rw