Prepare to fund regional projects, banks urged

Local commercial banks have been urged to position themselves to fund planned regional infrastructure projects by mobilising resources from external sources.
Rwangombwa (L) and Gatete during the Banker’s Association gala. Business Times/ John Mbanda.
Rwangombwa (L) and Gatete during the Banker’s Association gala. Business Times/ John Mbanda.

Local commercial banks have been urged to position themselves to fund planned regional infrastructure projects by mobilising resources from external sources.

The Minister for Finance and Economic Planning, Amb. Claver Gatete, said that despite growth in the financial sector, banks need to wake up to the challenge of looking for external resources needed to fund big infrastructure and development projects.

“You have done well in areas of increasing financial inclusion, rural banking and mobile banking among many other things. However, you need to start thinking of how to take up the role of financing big regional projects, such projects like the [planned] railway line, oil pipeline and roads. All these will need financing which will partly come from you,” the minister said.

He was addressing members of the Rwanda Bankers’ Association during their annual dinner gala. Gatete also implored banks to extend credit to the private sector not only to grow it but also to help drive the second Economic Development and Poverty Reduction Strategy (EDPRS II) objectives of socio-economic transformation, poverty reduction and youth employment.

The Governor of the central bank, John Rwangombwa, described 2013 as the slowest year in as far as financial performance is concerned in the entire global economy.

“We have had slow recovery both in euro zone and US, and for us in Rwanda where we are used to growing at 8 per cent, we also got affected, with economy growing at an average of 6 per cent,” he said.

The governor, however, said that despite challenges, the finance sector will continue picking up during the first quarter of 2014.

He emphasised the need to continue building a stable economy that will encourage more investors to come and build confidence in those who have already invested in the country. “We are managing this economy for you to invest more in this country,” Rwangombwa said.

Ephraim Turahirwa, the vice president Rwanda Bankers Association, said that a strong macro-economic environment and liberal monetary policy had made it possible for the finance sector in Rwanda to thrive.

“The process of mortgage registration has improved trade finance. We look forward to the conclusion of the leasing law…” he said.

The government is in the process of amending the 2005 lease law to make it cheaper and affordable for small and medium enterprises to lease equipment.

There are 11 commercial banks, about 460 microfinance institutions and Umurenge SACCOs operating in Rwanda. The central bank says the financial sector is strong and well capitalised. The average capital adequacy ratio is 23.1 per cent, exceeding the mini requirement of 15 per cent.

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