The Minister for Finance and Economic Planning, Uzziel Ndagijimana, has disclosed that over 3,000 small businesses have received financial support through microfinance institutions under the support of the Economic Recovery Fund.
He was speaking at a five-day Africa Microfinance Week and summit taking place in Kigali.
The largest inclusive finance conference in Africa, which has gathered around 600 international finance professionals, runs from October 19 to 22. It serves as a Pan-African platform for sharing insights and expertise on aspects of inclusive finance.
The summit provides a platform to discuss and share insights on strengthening the resilience of financial service operators and beneficiaries to shocks such as the Covid-19 Pandemic.
"African economies have been hard hit by the pandemic,” Ndagijimana said.
The International Monetary Fund (IMF), he said, projects that the economic recovery in Africa will be slower than the rest of the world.
"Therefore, we need to work hard, recover faster than predicted and to build back better,” he added.
The minister said that microfinance institutions can help accelerate the economic recovery from the Covid-19 crisis and help build the resilience and sustainability of economies in Africa.
"In Rwanda, we established an economic recovery fund to support the most affected businesses by Covid-19. It is important to expand the penetration of our microfinance institutions to build financial and technical capacity including digitization in order to increase, diversify and improve their services,” he said.
At least between Rwf4 billion and Rwf5 billion has been channelled through Microfinance Institutions to help small businesses recover from Covid-19 effects, according to Aimable Nkuranga, Executive Director of Association of Microfinance Institutions (AMIR).
Ndagijimana said that the portion to small businesses channelled through MFIs and Business Development Fund could increase in the next phase of the Economic Recovery Fund.
The Fund was introduced in June last year with $100 million.
In the next phase, the amount is set to be increased to $350 million and the portion to small businesses through microfinance institutions could also increase, he said.
The journey towards universal financial inclusion
According to Ndagijimana, the financial support during Covid-19 times can boost financial inclusion among the Rwandan population and contribute to the transformation process of societies and economies.
"In 2018, financial inclusion was at 48 per cent of the adult population meaning 52 per cent was financially excluded,” he disclosed.
Since then there has been a consistent increase in financial inclusion in Rwanda, reaching 93 per cent of the adult population as of 2020, he added.
The figure includes both informal and formal financial services, which was in part driven by the introduction of 416 savings and credit cooperatives across the country as well as the increased uptake of mobile money services
The percentage of the adult population still using informal banking services is 77 per cent.
Ndagijimana said that 87 per cent of the adult population had access to mobile phones and 61 per cent use mobile money services.
He said 86 per cent of adults saved their money using formal and informal forms of savings and formal savings in financial institutions represent 54 per cent.
However, he said, those borrowing from formal financial institutions represented 22 per cent.
"Despite the achievements, more efforts are needed to increase financial literacy among our population and help Microfinance institutions to adapt their financial products to the needs and capacity of the population and to tap into opportunities of digital technologies to expand services and ease their access,” he added.
Luxembourg’s Minister of Development Cooperation, Franz Fayot, said that there are huge benefits in the digitization of financial services, adding it has proved to be important during the Covid-19 pandemic.