Prime Minister Pierre-Damien Habumuremyi, yesterday, presented to both chambers of Parliament highlights of the performance of the service industry with focus on financial institutions, noting that the country is on course to achieving its targeted financial inclusion.
In order to achieve the country’s economic transformation and poverty reduction, Rwanda has set its goal on increasing financial inclusion to 80 per cent by 2017, through deepening and broadening the financial literacy of Rwandans.
The constitution requires the prime minister to present quarterly reports on several aspects of the nation. This first quarter, the premier opted to dwell his report on the performance of the banking sector and how it is contributing to national development.
Habumuremyi said between 2006 and 2013, the service industry, including banks and other financial institutions, contributed 46 per cent to the GDP growth compared to agriculture (33 per cent) and manufacturing (20 per cent).
In the same period, the economic growth stood at 12.1 per cent while in 2008, about 46 per cent of Rwandans were using formal financial services among them, only 21 percent had bank accounts.
“The figures presented a worrying situation which triggered a campaign to broaden financial literacy and, as a result, by 2012, those accessing formal financial services had increased to 70 per cent, while those with bank accounts were 42 per cent. This projects progress in nearing our target of 80 per cent and 90 per cent by 2017 and 2020, respectively,” Habumuremyi said.
As a growing economy, advanced banking systems or e-banking have been rolled out by the bankers and they have impacted highly on the economic growth.
“It should also be noted that service standards and charters have been set and all these have resulted into having initiatives like queue management systems,” the PM said.
The first quarter report shows the number of people using internet banking increased from 3,400 in 2012, to 9,000 in 2013, with transactions amounting to Rwf117 billion, from Rwf13 billion in 2012.
Mobile banking users also increased from 155,000 in 2011 to 412,000 in 2013, and this was due to increase of mobile phone usage. The amount banked also increased from Rwf5 billion to Rwf17 billion.
Habumuremyi also drew Parliament’s attention to mobile money usage, saying by the end of last year, about 2.5 million Rwandans were using the service and transacted up to Rwf330 billion.
Money in bank coffers increased from Rwf844 billion in 2012 to Rwf1 trillion in 2013, while the lending service grew from Rwf244 billion to Rwf844 in the same period.
“As part of improving the financial sector, today a teacher can acquire a loan of Rwf15 million payable in 15 years at an interest rate of 11 per cent,” said Habumuremyi.
He, however, pointed out that the financial sector is facing a challenge of nonperforming loans which increased from 5.4 per cent in 2012 to 7 per cent by the end of 2013.
“If this situation continues, it will highly affect the lending service. We are also faced with a big number of Rwandans who do not have collateral but as the economy grows, we are hopeful this problem will be sorted,” he said.
Reacting to the report, MP Suzanne Mukayijore said government should conduct a study on why nonperforming loans keep increasing.
“You hear of cases of auctioning properties of people who failed to settle their loans, possibly we have citizens that lack integrity, that’s why we need a study into this,” she said.
MP Agnes Mukazibera said the state of e-banking has made it easier for Rwandans to transact business.
“The Rwf15 million package allocated to teachers through Saccos is a good initiative, but government should also find ways of assisting the youth with noncollateral soft loans,” she said.
MP Petronille Mukandekezi raised concerns over the few branches of Saccos yet they have many clients spread out across the country.
“The coverage of Saccos stands at 63 per cent. Sometimes a teacher may spend a whole day trying to access the nearest branch for salary. Saccos should have e-banking service to ease tansactions,” she said.