The Department For International Development (DFID), a UK programme promoting development and reducing poverty has committed £10m (Rwf8.7b) to improve access to financial services by many Rwandans.
Access to Finance Rwanda (AFR) also seeks to achieve sustainable development in the livelihoods of the poor through increased access to financial services for the poor rural and urban inhabitants.
This was announced yesterday at Kigali Serena hotel during the launch of the project that will run for four years.
“This programme comes at the right time given that Rwanda’s financial sector is still low. It will boost us to develop it (financial sector),” said François Kanimba, Governor of the National Bank of Rwanda (BNR).
The project is a boost to the financial sector where statistics by the Central Bank indicate that only 20 percent of Rwandans have access to banking services. Insurance coverage is at a staggering 1.6 percent and the social security fund coverage at 5 percent.
Kanimba also said that despite government efforts to develop the sector, indicators show that its performance is very low.
“Financial markets that find innovative ways to provide good quality services to the poor are our best bet for poverty reduction” said Mark Lowcock, DFID’s Country Programmes Director General.
DFID estimates the programme to improve access to financial services for some 500,000 poor people by improving the capacity of financial institutions.
It is also expected to strengthen and support human resource development, support to technology development as well as ensuring an appropriate legal and regulatory structure within the financial sector.
ARF is being co-funded by the World Bank and has, as principal government partners, the Ministries of Finance and Agriculture and the Central Bank.
Kanimba pointed out some of Rwanda’s financial sector challenges as resource mismatch since the demand for credit by the private sector is quite high and banks run short of credit when they try to respond to this demand.
DFID will also extend services to the Rwandan population which will include payment systems, promoting a culture of saving and the introduction of new products among others. More than half of the funds will go to rural development, DFID says.