Local microfinance institutions (MFIs) have been urged to embrace responsible lending practices and protect consumers to boost access to finance.
Bernard Nsengiyumva, the National Bank of Rwanda (BNR) principal analyst in charge of policy and regulations, said it is important for MFIs to adopt practices that will drive financial inclusion, especially in rural areas.
Nsengiyumva was, yesterday, speaking during the ongoing international conference on responsible and inclusive finance in Kigali. The conference brought together over 400 financial experts and policy-makers to discuss strategies that will help foster a more responsible and inclusive financial system in sub-Saharan Africa.
Nsengiyumva also called on financial institutions to promote consumer rights, saying this was essential to support the sector growth.
The official also urged MFIs and other credit institutions to bring to the market products that meet customer needs.
Speaking at the event, Aimable Nkuranga, the Association of Microfinance Institutions in Rwanda (AMIR) executive director, explained that the conference seeks to further the implementation of the global responsible and inclusive finance agenda by providing learning opportunities for a range of actors about experiences within and outside of Rwanda.
According to Straton Habyalimana, the senior programme manager for responsible financing at the Small Enterprise Education and Promotion Network, understanding customer needs will help MFIs design products that are tailored to the market, which will improve profitability of the industry.
Going digital Habyalimana urged MFIs to adopt platforms that will help boost their interface with customers. James Kwezi, a digital financial services expert in Kigali, said MFIs should leverage technology to become more efficient and profitable.
The central bank recently encouraged sector players to embrace automation, saying it would help reduce the cost of operation and the rate of bad loans. Central bank figures indicate that the level of bad loans in the sector dropped from 9 per cent in December 2016 to 8.2 per cent the over the same period in 2017.
The total number of accounts in MFIs increased to more than 3.4 million by December 2017, while the sector’s total assets grew by 9.7 per cent to more than Rwf244 billion.