The government has once again reiterated its commitment to raise the savings rate from the current 10.2 per cent to 20 per cent of the Growth Domestic Product by 2020 in order to trigger investment of 30 per cent of GDP.
While officially kicking off the 2017 Savings Week in Kigali, yesterday, the Minister for Finance and Economic Planning, Claver Gatete, said the country is looking to increase the level of savings to significant levels.
“There’s no country that develops without savings. Different countries have different ways of promoting savings. In our case, we are using all possible channels to ensure that we have more people who save,” he told journalists in Kigali.
This year’s Savings Week will run until October 30.
Interacting with journalists, the minister took time off to ask all journalists who had attended the briefing how much they save from their annual income. Some said 15 per cent, others 20 per cent, while others said zero per cent.
The minister said if more Rwandans in different fields don’t save the country’s banking system and the whole economy would be in trouble, highlighting that this week will therefore serve as an opportunity to sensitise more people about the benefits of saving.
“The money saved by individuals, institutions, and countries is the money that the banks lend out for investment. If people don’t save it means that the banking system will depend on the money they borrow from outside, which is bad because the money they make goes outside directly,” he said.
Gatete said that during the Savings Week, which will run under the theme, Our Savings, Our Wealth, a series of activities will be conducted at the institutional level, where financial institutions, savings groups’, among other stakeholders, will showcase new savings products.
According to the 2016 Finscope Survey, about 86 per cent (around 5.1 million individuals) of adults in Rwanda save. This includes all forms of savings. The survey indicates that saving through formal institutions currently stands at 49 per cent, showing an increase of 13 per cent, from 36 per cent in 2012.
The uptake in formal savings has been driven by Umurenge SACCOs, which stand at 27 per cent and mobile money savings, at 17 per cent.
According to Eric Rwigamba, the director general in charge of financial sector development at the ministry, this success is attributed to the different programmes that the government has put in place, including the National Financial Education Programme.
“This particular programme has continued to bring the attention of different categories of Rwandans to savings culture, and it has contributed significantly to raising the level of financial literacy and savings in the country,” he said.
Rwigamba said with this initiative, the saving mobilisation strategy, the village savings and credit groups and associations, as well as capital market authority, banks and insurance companies, more people are now starting to save more than ever.
However, he highlighted that many people are saving for short-term rather than for long-term. He argued that the remaining work is to sensitise people to make long term savings which he said supports investment for economic growth and increased productivity for them, their households and the country.
The Government, through the Rwanda National Investment Trust Ltd, set up Iterambere Fund to improve the level of savings.
According to Andre Gashugi, the firm’s chief executive, people who have saved with the fund have since earned significant interest.
“Today, we have more than 2,000 people who have saved with the fund to the tune of Rwf1.4 billion. People who save with the fund have generated higher interests and this is because of different savings campaigns we have conducted over time,” he said.
This, he said, was done through working with higher education institutions but also the youth savings groups.
Eric Bundugu, the acting executive director of the Capital Market Authority, said they are also working with schools to educate them about the importance of savings, and that some have opened investment clubs, while others have opened savings cooperatives.
According to Jacky Mugwaneza, the executive secretary of Rwanda Bankers’ Association, this week all banks will be showcasing special savings packages to the public across the country.