Rwanda adopted a national savings strategy about five years ago with an aim of promoting a savings culture among the population. So, as Rwanda joins the rest of world to mark this year’s World Savings Day on Friday, the big question is has the strategy delivered as expected thus far?

The strategy that outlines guidelines on savings mobilisation from the masses was also supposed to be part of poverty alleviation campaign at household and national levels (at least on paper). It was expected to help Rwanda achieve a gross national savings of 20 per cent of gross domestic product (GDP) that would in turn propel gross national investment to 30 per cent of GDP by 2018.

According to Amb. Claver Gatete, the Minister for Finance and Economic Planning, a lot has been achieved over the past five years. Gatete says one of the significant outcomes of the strategy was the establishment of 416 Umurenge Saccos that are tailor-made to enhance access to financial services, encourage the culture of savings and also enable grassroots people to access soft loans to start income-generating activities, among others.

Gatete says Umurenge Saccos are largely responsible for increasing the level of access to financial services to 72 per cent by 2012 and are expected to bring more Rwandans into the formal financial services industry.

"Government is banking on microfinance institutions (MFIs) to ensure that all Rwandans access financial services within a radius of few kilometers,” he says.

Experts take

Statistics from Ministry of Finance indicate that the current gross savings ratio to GDP is at a low of 15.3 per cent.

However, Jean Marie Vianney Nzagahimana the president of the Association of Microfinance Institutions in Rwanda (AMIR), says the plan has supported the sector’s growth.

"Despite the challenges, the sector is strong in all aspects.

"We are, not only taking financial services to the people, but also encouraging them to save and re-invest because this is how they will be able to increase household incomes and create jobs for the youth,” Nzagahimana, also the Umwalimu Saccos board chair, says.

He adds that the savings strategy is critical if Rwanda is to realise its Vision 2020 objectives and transition to a middle-income economy.

Eric Rwigamba, the Ministry of Finance director for financial sector development, notes that there are currently over 18,000 savings accounts by students with Rwf140 million worth of deposits, thanks to the strategy.

Rita Ngarambe, AMIR executive secretary, notes that the sector works with all stakeholders to ensure the all the necessary infrastructure is in place to ease service delivery.

"We are working with the central bank, the Ministry of Finance and other stakeholders to ensure that we have the infrastructure that will help us deliver on our mandate as prescribed in the strategy, thus propel Rwanda towards becoming a middle-income economy,” Ngarambe says. 

Embracing IT

Peter Rwema, the director general for programmes at AMIR, says the microfinance industry has put in place strong mechanisms that will help establish integrated banking systems, thanks to the new technological innovations they have embraced.

Rwema says the system will help MFIs create efficiency and increase access to financial services and ultimately drive the financial inclusion agenda promoted by the government.

"In terms of financial infrastructure, we are working to ensure that we provide a modern platform to be able to serve the rural population better and efficiently.”

The sector is currently rolling out a new performance monitoring software application to improve transparency and efficiency within microfinance institutions.

According to Callixte Kalisa, the director general of CAF Isongo, the development will enable the sector double its performance once this system has been embraced by all players.

Sector performance

The microfinance industry has continued to grow and is well capitalised despite technical, financial and human capital challenges, according to data from the National Bank of Rwanda.

Central bank statistics indicate that the sector’s total assets expanded by 14.5 per cent between December 2013 and June 2014 to Rwf147.4 billion, up from Rwf128.7 billion.

The increase was mainly driven by the liquid assets and gross loans which increased from Rwf42.1 billion to Rwf53.4 billion and from Rwf73.5 billion to Rwf81.2 billion, respectively.

The industry’s capital adequacy ratio was at 31.9 per cent well above the minimum regulatory requirement of 15 per cent, while its liquidity ratio stood at 86.2 per cent against the minimum required of 30 per cent as at June 30.

Overall, the microfinance sector gave out Rwf81.2 billion worth of loans over the period, with borrowers from services sector (restaurants and hostels) accounting for 35.8 per cent of the total loan book, followed by contractors (public works) 31.2 per cent and agriculture sector enterprises at 12.6 per cent.

MFIs clients speak out

Patrick  Habumuremyi,  a resident of Rutare sector in Gicumbi District, Northern Province,  says he secured a loan from Nyamiyaga Savings Co-operative and started a farming project.

"I have been able to earn Rwf1.5 million from Irish potatoes and beans annually thanks to the money I got from the co-operative,” he says adding that he has also bought a 1.5-hectare piece of land.

The 28-year-old says MFIs promote self-reliance, and have helped many Rwandans start income-generating projects that have improved their livelihoods.

"I got a loan of Rwf20,000 and bought three pigs. When they multiplied, I sold some of them to repay the loan. Later, I acquired another loan which I used to buy a piece of land… Presently, I live a better life compared to say three years ago since I have enough money to cater for my needs,” says Anastasia Nyirabatunzi, a resident of Mushonyi sector in Rutsiro District.

Despite the achievements recorded by MFIs and Umurenge Saccos, a lot still needs to be done to reduce the high level of bad loans. Also, the savings culture is yet to take a firm root especially among the youth.