The recently–launched financial education strategy will boost economic growth and strengthen the banking industry, experts have said. 

The plan targets to increase financial inclusion to 80 per cent by 2017, up from 42 per cent currently. It will also focus on improving financial knowledge and skills of small-and-medium enterprises and the general public to create a base for banks to mobilise deposits. 

Eric Rwigamba, the director general of financial sector development at the Ministry of Finance, said the move will increase SMEs business management skills, making it easy for them to handle their cash flows.

"This strategy will make it easy for SMEs to understand basic financial management concepts, especially budgeting and planning and how to manage finances. It will also help them understand the benefits of saving or buying insurance policies for future emergencies and risks,” Rwigamba said.

Peter Rwema, the Association of Microfinance Institutions of Rwanda director for research and development, said the strategy presents an opportunity for banks to mobilise and increase deposits.

"If the population is financially literate, and saves with banks, it is easy to raise deposits and improve financial institutions’ capacity to lend to business people.”

Rwema also noted that the plan will create confidence in the financial sector.

"Banks will now have confidence to lend to the SME sector because they will be aware that SMEs have the skills to manage finances and repay loans,” he said.

Celestin Rwabukumba, the Rwanda Stock Exchange co-ordinator, said the strategy makes it easy for small-and-medium enterprises to choose the right financial tools, including the type of loans and insurance to acquire.

"Business people will now be able to make financial decisions from a point of knowledge, especially as far as costs and benefits of using a given financial service provider are concerned,” he said. 

Kevin Kavugizo, the National Bank of Rwanda director for microfinance supervision, said the plan will help bring on board the unbanked, especially from rural areas.

"Equipping people with knowledge, the right attitude and skills is crucial to ensure  financial discipline among the public. Also, when small businesses start saving with banks, this will increase capital for investment and, ultimately, reduce rural poverty,” he said.  

Only 42 per cent of adults above 18 years use formal financial institutions such as banks, micro-finance institutions and Saccos to save or access financial services, whereas 37 per cent belong to informal savings groups, according to the Finscope Rwanda 2013 report, conducted by Access to Finance Rwanda.

Herbert Ruzibiza, the head of financial services at Rwanda Development Board, said the strategy is significant as Rwanda moves to become a financial hub.

"Having a policy that combines financial inclusion and education will not only boost the banking industry, but also enhance efforts to turn Rwanda into a financial hub,” he said.