Early this week, we reported that Rwanda was expecting to collect about $200 million as foreign remittances by the end of 2010. According to the Central Bank, these new projections would constitute a 16 percent increase from the previous year.
Rwanda’s remittances have previously been affected by the credit squeeze that resulted from the liquidity crunch in 2009 and the global economic recession. However, as the economy recovers, Central Bank’s changes in the regulations governing payments services would come in handy as they liberalize the industry.
The new regulation on Remittance Services Providers (RSP) eliminates exclusivity in money transfer, something that affected the amount of money that would be sent to Rwanda.
Initially all RSPs had to use banks to send and receive funds. More still, Western Union and Money Gram got the banks in exclusive contracts and blocked out other service providers.
The impact of foreign remittances is incredible; it helps stabilize the Rwandan Franc compared to other currencies in the region. Already there are initiatives to put remittances to better use, as a way of boosting the economy. The Rwanda Diaspora Mutual Fund was licensed and has intentions of investing in government securities.
Rwanda can never have a specific window for remittance because it comes in small amounts and in particular periods. However, any initiative to attract more remittances back home is welcome.