Banks have been urged to work with village savings groups as part of efforts aimed at deepening formal financial inclusion.
National Bank of Rwanda (BNR) governor John Rwangombwa said banks must create strong linkages between the informal and formal financial market segment to further strengthen the robustness of the sector.
“As part of government’s initiative to increase access to financial services, it is imperative to create strong and strategic linkages between the financial institutions and the village savings groups to bring on board people that are still financially excluded,” he said. The central bank chief was on Thursday speaking during the launch of the savings groups map in Kigali.
Rwangombwa urged financial institutions to leverage new technologies, including mobile financial services, to increase their reach, especially hard-to-reach areas. He challenged banks to design products that will boost formal financial inclusion. The government targets to boost financial inclusion to 80 per cent and 100 per cent by 2017 and 2020, respectively.
According to the FinScope survey report for 2016, Rwanda has already surpassed its financial inclusion target, with more than 89 per cent of adult population accessing financial services. Those that are still financially excluded dropped to only 11 per cent in 2016, from 28 per cent in 2012.
Judith Aguga, the Access to Finance Rwanda technical director, said there is need to increase financial education to boost initiatives geared at deepening formal inclusion. Aguga noted that limited knowledge was still a big challenge among savings groups.
Statistics indicate that 90 per cent of the savings groups are not linked to financial institutions, a problem those championing financial inclusion must address to reduce the gap.
“There is, therefore, need for banks to sensitise members of savings groups about their products to encourage them to embrace the formal banking sector,” Aguga said.
Ivan Murenzi, a financial expert at Access to Finance Rwanda, urged banks to up their game and sensitise the public, especially such groups, to build trust and increase uptake of their products.