The National Bank of Rwanda (BNR) has launched a cashless economy campaign seeking to bring on board members of the business community.
The campaign, according to central bank governor John Rwangombwa, is designed to increase use of electronic payment systems among the business community.
Rwangombwa said the move will help boost efforts toward achieving a cashless economy but also drive the country towards financial inclusion.
Rwangombwa, who was speaking during a sensitisation workshop with members of the Private Sector Federation (PSF) in Kigali, yesterday, said business community is losing a lot of money by not embracing these innovative e-Payment solutions.
“According to our statistics, businesses are losing up to 6 per cent in non-electronic transactions instead of 2 per cent if they were to embrace these innovative solutions,” he said.
“There is no doubt that these e-Payment platforms have the capacity to reduce the need to carry cash, thus give customers the opportunity to deposit money through a mobile transfer. This has always been our long-term objective that we believe will transform Rwanda into a cashless economy,” Rwangombwa said.
The central bank governor added that, despite the efforts, the country is still cash-dominated, making it difficult for some of the innovations to penetrate as fast as expected.
The Government has been investing a lot in infrastructure while at the same time encouraging financial sector players and ordinary Rwandans to embrace electronic platforms to be able to drive Rwanda into a cashless economy by 2020.
However, according to central bank, paper money is still dominant in the economy due to a cash-based culture.
In addition, the number of touch points in terms of point of sale, agents and merchants are still limited.
The idea, according to the Minister for ICT, Jean Philbert Nsengimana, is to make it more convenient for people to transact but also reduce the cost involved in managing cash risks.
‘Electronic payment platforms will not only help the private sector in terms of efficiency and safety when carrying out business transactions, but also because digital financial services have proven to spur economic growth through widening tax base and employment while promoting cashless economy,” Nsengimana told The New Times.
“As government, we are committed to ensuring these cashless platforms and services are readily available and affordable across the country,” he added.
Nsengimana challenged stakeholders, especially banks, to become more innovative to drive cashless transactions.
According to Maurice Toroitich, the chief executive of Banque Populaire du Rwanda, businesses are poised to lose out if they don’t go digital.
“It’s time to understand that accepting non-cashless payment solutions will help encourage customers to spend more,” Toroitich said.
Rwanda seeks to become a financial and digital hub by 2020 where all citizens will be financially included.
According to the Finscope report, released last year, formal inclusion was at 68 per cent of which mobile money added to 23 per cent.
Private sector welcomes campaign
Meanwhile, Benjamin Gasamagera, the chairperson of Private Sector Federation (PSF) is confident about the quest for a cashless economy.
Experts are confident the growth of digital financial services, which is being fuelled by proliferation of facilities that promote a cashless culture, will ultimately turn Rwanda into a cashless economy.
The McKinsey Report of September 2016 estimated digital financial service to have potential of boosting annual GDP of all emerging economies, including Rwanda by at least $3.7 trillion by 2025, or 6 per cent above baseline projected GDP.
Such a potential, according Lindy Larson, the Reach for Change Africa programmes manager, can only be fully exploited through strong partnerships between financial institutions and telecommunication firms.
The experts further believe that with more and more digital financial service products, economies like Rwanda will at least enjoy low cost of providing financial services by up to 90 per cent, enabling providers to serve lower income customers profitably.
It will equally attract an additional $4.2 trillion in new deposits into the financial system, as more people obtain access to accounts and shift their savings from informal mechanisms.