Rwanda’s financial reforms bearing fruit – BNR

Policy measures undertaken by the Central Bank to strengthen the financial sector in the recent past has led to improved management and performance of the industry, the regulator has said.
L-R : Francois Kanimba, the Central Bank Governor ; Consolate Rusagara, the Director Financial Systems Department at the World Bank
L-R : Francois Kanimba, the Central Bank Governor ; Consolate Rusagara, the Director Financial Systems Department at the World Bank

Policy measures undertaken by the Central Bank to strengthen the financial sector in the recent past has led to improved management and performance of the industry, the regulator has said.

According to Francois Kanimba, the Central Bank Governor the impact of the financial crisis on Rwanda’s financial sector was limited. He also added that measures to control the effects include implementing new laws governing the financial sector including commercial banks, micro finance sector and insurance sector.

Addressing a cross section of financial experts from Africa attending a workshop on “Financial Crisis Preparedness” jointly organised by the World Bank, Kanimba said, “These reforms helped to stabilize our financial institutions and increased their resilience to the shocks of the global financial crisis.” The Toronto Leadership Centre and First Initiative were also sponsors of the workshop.

Citing banking reforms including establishing a strong legal and regulatory environment for bank supervision enforced by the National Bank of Rwanda, the Governor observed that recent performance trends in the industry reflect a positive trend.

“The minimum share capital requirement for commercial banks has been increased by more than three times during this period as well, and the capital adequacy ratio has been revised upwards,” Kanimba said.

Central Bank reported early this year that all banks in Rwanda were complaint with the minimum capital requirement of Rwf5 billion.

The percentage of the bank’s capital deposited at the Central Bank (capital adequacy ratio) according to the monetary policy paper presented early this month, increased to 19.4 percent against 15.9 percent in December 2008.

The paper also added that the microfinance sector, total assets increased by 20 percent while equity increased by 28.8 percent. The gross loans and deposits increased also by 16.4 percent and 18.8 percent.

However Kanimba also observed that the impact of the global financial crisis has presented extraordinary challenges for financial sector.

“It is extremely important therefore that we, in the financial sector, are always prepared, especially in the present environment of high economic uncertainties,” he said.

The workshop which is going on at the Serena Hotel Kigali is focusing on equipping participants with skills on how to manage a crisis arising from problems in a potentially systemic financial institution.

In an interview with Business Times, Consolate Rusagara, the Director Financial Systems Department at the World Bank underscored the need for African countries to be integrated into the ongoing global financial sector reform.
“There has been a rethinking of what needs to be done to strengthen them (financial sector) so that in future if there is any other crisis. Our systems are much stronger,” she said.

Rusagara also observed that strengthening the supervisory capacity of the Central Bank and regulatory authorities is critical for creating a stable financial system on the continent.

“As the financial sector in Africa grows and integrates into the global financial system...  …they will need to strengthen risk management; make sure they have contingent plans; the banking sector should be well capitalized,” she said.

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