I have a long-running dispute with my bank, Bank of Kigali (BK), recently I was the victim of fraud and I felt they responded poorly, I thought about writing a 40-page thoroughly researched document about the recent fraud cases to shock BK into change, but I realised it was pointless.
I will illustrate with a story, imagine you go to a restaurant and you pay for the buffet, when you get to see the buffet, it is terrible with rotten food.
You decide to walk out and accept the loss, but the restaurant charges you to exit the venue, so you are stuck this rotten food.
The bank wants to charge me $40 to close the account, why does it cost that to click a computer mouse? That charge exists to lock the customer in the vice-like grip of unfair practices, so BK, Rwanda Commercial Bank (BCR) or Banque Populaire (BP) can maintain nearly a million dormant accounts that are just making money off subscriptions.
Most customers just withdraw all their money and run up a debt; then the banks can chase you through the central and deduct it from any other account.
The central pillar of fairness in competition is the customer’s right to choose what products to consume and when to stop consuming.
The one reform that could introduce true competition among the seven dwarfs of the Rwanda banking sector, of which BK is the tallest – is to allow customers to leave free of charge, provided they give a month’s notice.
The current situation is not sustainable; we need stand-alone legislation for two main aspects; consumer rights and competition law. We have articles regarding this in the company law as well as the regulation of utilities law.
This legislation needs to be agreed on a regional basis, because a number of East African companies are now multinationals, so there is a need to have uniformity for all consumers.
The East African parliament must introduce EAC-wide legislation for our national parliaments to ratify.
Any assessment of consumer rights would state that the closing charge that BK charges is a restrictive practice that limits the choice available to customer and maintains an artificial oligarchy or cartel, with no real competition.
National legislation is not enough it has to be regional; the two forces driving progress are consumer rights and the competition among companies.
The two have to be balanced; classical economists call for little or no antitrust legislation, claiming the market will regulate itself, but the ones on the consumer side believe that the consumer should be protected by all means.
We will never be able to produce value-added goods or services for export until we raise our standards, we cannot raise our standards until we understand what international standards are; therefore we have to move from a producer-mentality to a consumer mentality.
We need to get rid of the current situation where the consumer is not protected and companies can use unfair practices to create an artificial market, we are looking for a way to wake the dinosaurs, this is it.
Let the customer decide, but give the customer legislation to enable that customer to make a choice.
I ask the banking regulator to review the policy that allows BK to charge closing fees.
Then we can expect the first big challenge of the EAC, to produce harmonised consumer law as well as competition legislation.