Members of Parliament have urged government to devise strategies to lower interest rates charged by financial institutions to allow for easy access to financial services that will help improve their welfare and stimulate the country’s economy.
Members of the Parliamentary Standing Committee on National Budget and Patrimony said this Wednesday as officials from the Ministry of Finance appeared before the committee to outline their activities for the 2017/18 financial year as well as highlight the achievements in the current fiscal year.
During the session, officials from the ministry said that most of their efforts in the upcoming financial year will be geared towards promoting financial inclusion to increase the number of the banked population in the country.
Caleb Rwamuganza the Permanent Secretary, and Secretary to the Treasury, said the ministry will also strive to ensure that loans offered by financial institutions, both for short and long-term periods, increase.
He said that, in this fiscal year, access to finance for the adult population grew from 72 to the current 89 per cent.
Loans to the private sector amounted to Rwf788.1 billion in 2016/2017, representing an increase of 6 per cent from the previous year, while the target is to ensure that banks disburse at least Rwf853 billion in loans in the fiscal year that begins in July.
The Chairperson of the Committee, MP Constance Mukayuhi Rwaka, said that the issue of high interest rate should be dealt with so as to support the growth of the private sector, which is critical to the country’s economy.
With two months remaining for the current fiscal year to come to an end, the execution of the Finance ministry budget is at 96 per cent, according to Rwamuganza.
Rwamuganza also said that Rwanda will continue to enhance savings and lending in the long term through treasury bonds.
As of February 2017, Rwanda had issued Treasury Bonds worth over Rwf190 billion since 2008, according to figures from the National Bank of Rwanda.
“Economic Insight: Africa Quarterly briefing Q3 2016”, a part of the series of the quarterly economic report by the Institute of Chartered Accountants in England and Wales (ICAEW) and Oxford Economics, which was released in 2016, ranked Rwanda the best country in Sub-Saharan Africa in terms of easing access to credit followed by Zambia, Kenya, Ghana, Mauritius and Uganda.
Rwanda’s best performance, the report said, was thanks to reforms that included strengthening borrowers’ and lenders’ collateral laws.