After the recent calls from the central bank and government for financial Institutions to draft products to tap the unbanked rural poor, Bank of Kigali has followed suit with three rural friendly products.
The products target the most unbanked rural people especially women, the youth, and retired and the aged.
“We know we have a responsibility to contribute to the social, economic development of our people; the three products are meant to transform the lives of the people whom we think are excluded from accessing finance,” Naibo Lawson, BK Chief Operations Officer said.
Microfinance Institutions were the first to heed to central bank’s call for rural financial inclusion.
“If you are earning a dollar a day, then our objective is to see that you go on to earn 10 dollars a day,” he said, while unveiling the three new products at the bank’s head office in Kigali on Wednesday.
The products, which include the women entrepreneurship account, the youth entrepreneurship savings account and the senior citizens, would help those without collateral to acquire loans.
Naibo said BK mobilised US$20m from French Cooperation, €5m from the European Investment Bank and expects additional US$12m from an international development bank. The money would be invested in the new products.
Protais Mitali, the Minister of Youth, Sports and Culture welcomed the idea, saying that it creates an opportunity for the youth who are financially marginalised due to lack collateral.
He underscored that: “These are good products and at a right time, this is what we have been looking for in our financial system.
This will be helpful especially to the youth because they don’t need collateral.”
Allaying fears within banks on non-performing loans due to the high risk factor associated with lending to the agriculture sector, the Minister urged banks to tap into government’s guarantee fund to increase financing to the sector.
The guarantee fund covers 50 percent of the non-performing loans related to agricultural lending.
“We are in close collaboration with Rwanda Development Bank on the issue of guarantee fund because this is a key tool to help these people. Yong people should come and get information on bankable products, they should be job creators not job seekers,” he said.
According Nyirankundabakize Manage, a member of the Mutuele Ikyuzuzo cooperative (COOMI), BK’s initiative is a relief to women entrepreneurs who find it difficult to access financial services due to lack of guarantees.
“We have ideas to develop, but it has been a problem for us to go to the bank and ask for a loan since we don’t have a house or land as a guarantee; but now BK does not want a guarantee,” she said.