MFIs embrace technology to enhance service delivery

More microfinance institutions (MFIs) are embracing technology as the sector moves to enhance operations and reporting mechanisms. To boost these efforts, the Microfinance Institutions in Rwanda (AMIR) and stakeholders are supporting MFIs to acquire new software that will enable them to automate their systems and improve efficiency and transparency.

The co-banking software is designed to integrate MFIs, enabling them to share information among themselves, officials said yesterday. 

Olivier Kamali, the software project manager, said the move will also promote professionalism, innovation and improve customer service.

“So far, more than 22 microfinance institutions have signed up to install the Kenyan-developed technology. However, we are targeting at least over 50 MFIs which will enable them to integrate their systems using the technology. This way, the sector will be able to increase efficiency to serve customers better,” he noted.

Already, more than 230 microfinance staff are currently undertaking a two-month training on how use the software.

John Peter Rwema, the Microfinance Institutions in Rwanda (AMIR) executive director, is optimistic the software will ease service delivery, build capacities of MFIs and also help deepen financial inclusion.

Sector players, through AMIR, have been working on a number of strategies to streamline the industry and improve service delivery.

In 2014, the industry adopted a new application to help MFIs monitor performance and data collection across the microfinance sector. The performance monitoring software application (PMT) was tipped to enhance transparency and efficiency within microfinance institutions. The technology also sought to ease access to credit by the rural poor and help create a one-stop centre for data collection of all credit institutions at AMIR headquarters in Kigali.

Supported by the National Bank of Rwanda, Access to Finance Rwanda and Small Enterprise Education and Promotion Network, (SEEP), a US-based organisation, the application is expected assist credit institutions’ technical aspects and financial reporting.

Other initiatives

In addition, the sector recently embraced a dual apprenticeship training system to boost capacity and enhance efficiency. The initiative is designed to foster professionalism and enhance the quality of human resources among microfinance sector players across the country.

The training programme is a joint collaboration between AMIR and the Rwanda Institute of Cooperatives, Entrepreneurship and Microfinance (RICEM) in partnership with the Savings Banks Foundation for International Cooperation.

Sector performance

The microfinance sector’s total assets increased by 6.6 per cent year-on-year to Rwf223 billion in December 2016, lower than the growth of 31 per cent registered in the same period the previous year, according to central bank figures.

The sector, however, remains solvent and liquid with capital adequacy ratio (capital risk) standing at 35.2 per cent in December 2016, above the minimum regulatory requirement of 15 per cent.

The liquidity ratio of MFIs stood at 88.8 per cent at the end of December 2016, significantly above the prudential limit of 30 per cent.

The sector’s non-performing loans increased from 7.9 per cent in December 2015 to 9 per cent in December 2016.