Microfinance Institutions (MFIs) have to craft new financial strategies if they are to address current bottlenecks towards financial inclusion for all, according to the central bank.
François Kanimba, Governor of the National Bank of Rwanda said that considering the current success of MFIs to promote financial inclusion, especially the rural poor, there is need for new strategies to address the persistent gaps in service delivery.
“I sincerely expect new strategies and ideas that will assist in boosting the availability of financial services to poor people living in rural areas,” Kanimba said, Wednesday, during a workshop on effective models for financial inclusion in Kigali.
This comes at a time central bank statistics show that only 21 percent of the Rwandan population has access to formal financial services. Government targets 80 percent by 2017.
The Governor noted that few and undiversified financial products in rural areas, inappropriate models for delivery of financial products and service, low skilled MFIS managers and financial illiteracy are some of the challenges that hinder financial inclusion.
He said the central bank is willing to work with MFIs to design models that will address these challenges and help boost access to financial services.
“I further hope that our different technical teams will come up with specified models that will facilitate MFI’s products become more affordable.”
In 2009 government instituted a national saving policy, emphasizing the need to have at least one Savings and Credit Cooperative (SACCO) at each sector.
Since its implementation over 416 SACCOs are operational.
Rita Ngarambe, the Executive Secretary of the Association of Micro Finance Institutions of Rwanda (AMIR) also stressed the need for MFIs to identify products that suit the demands of low income people.
The rural poor who constitute 85 percent have been discriminated from getting financial services from banks due to financial illiteracy.
“The classical banks have no products that are appropriate to poor people; some customers are illiterate with low levels of financial education,” she said.
Ngarambe urged MFIs to engage with insurance companies in designing loan insurance policy for the agriculture sector, which employs majority of Rwanda’s workforce.
The sector is perceived by most financiers as highly risky.