On Tuesday this week, BK Group’s subsidiary, BK Capital launched a trust fund dubbed Aguka Unit Trust Fund.

This makes it the second unit trust fund in the local market after Rwanda National Investment Trust’s Iterambere Fund which was established by the government with a mission to promote and manage funds.

Such funds are an ideal way to drive up Rwanda’s domestic savings from the current about 12 per cent to the targeted 24 per cent by 2024.

Domestic savings are  important as they create a means towards self-reliance, investment, growth as well as economic resilience.

Domestic savings will play an ideal role in further reducing the country’s reliance on aid as well as foreign financing to finance both public and private investments.

While increasingly, Rwandans have been making personal savings in bank accounts through the multiple products that have been set up by local operators, such savings by households and individuals in the form of cash or assets do not necessarily count as domestic savings.

Growth in financial savings instruments in Rwanda over recent years has not meant higher over domestic savings in the country

This explains why while statistics show that financial penetration which has grown steadily over the years to over 90 per cent and a growing section of Rwandans have financial savings instruments such as bank accounts, Saccos, and mobile money, the domestic savings rate has not grown much.

It is also common for Rwandans to invest by buying parcels of land in anticipation that they will appreciate in value over time and they can sell the parcels for more than they bought them.

This too, despite being popular does not qualify as domestic savings.

For the personal savings to have an impact on domestic savings, they have to be invested in income generating facilities to qualify such as trust funds. 

The participation by Rwandans in such trust funds will see the country have a pool of readily available funds that can reduce reliance on external financing which drive up the cost of investment projects and consequently public debt.

A 2019 study by UNDP noted that among the interventions that could drive up domestic savings is establishing intermediation and mobilization between personal and household savings to move resources from savers to financial units and investment.

These interventions ought to create avenues where the savers can invest through instruments such as capital markets, government bonds as well as investments.

This will lead to instances where savings by households and corporations are investable hence counting as domestic savings.

 Going forward, there is also much need for awareness across the country to have active participation to change personal savings into domestic savings.