Oiko Credit International, is a Holland-based global development financing organisation. The institution opened shop in Rwanda in 2012. Ging Ledesma is the firm’s director for social performance and credit analysis stationed at the institution’s head offices.

She talked to Business Times’ Peterson Tumwebaze about banking and role of financial institutions in poverty eradication:

Briefly tell us about Oiko Credit

Oiko Credit International is a global development financing institution that has been in operation for 40 years in over 65 countries. We work with businesses and financial institutions that support financially disadvantaged people and contribute to local community development. Oiko Credit opened offices in Rwanda in 2012 for the same reason.

Financial inclusion and access to finance are some of the big challenges facing Africa and, Rwanda in particular. What is Oiko’s experience so far and how can we achieve financial inclusion?

The reality is Africa has been a difficult market, not only for Oiko, but also other competitors, especially on matters of increasing access to credit.

Financial institutions should, therefore, ensure a balance between social and financial returns and fund disadvantaged people to help them come out the poverty trap.

Universal access to financial services is not easy to achieve, if all sector players and governments contribute meaningfully to this objective.

Banks argue that poor people do not pay back loans. What is your take on that?

Lending to poor people, even those with no bank accounts is possible because they, too, can save and repay the loans. We have, for instance, given out over €2.5 billion to poor people cumulatively over the last 40 years and so far €1.7 billion has been paid back. This alone demonstrates the capacity and ability of poor people to service their loans.

So, it is important the banks deliver financial services in a way that benefits the poor people.

This, however, requires moving from the traditional commercial financing approaches to ensure that the poor access funding to do business and improve their standards of living. Remember, classical financial approaches do not help poor people; they only seek to benefit the rich.

Rwanda should avoid this trap to achieve its goal of taking financial services within reach of all citizens.

What is your advice to bankers?

They must promote responsible financing by putting the client at the centre of everything they do so that all those that want finance get it. Financial inclusion is also about having services within given distance so that people do not have to walk long distances for services.

Banks should also understand and fund projects to improve clients’ livelihoods. Therefore, they should not focus on only profits, but how they contribute to the social welfare of clients. They should also interact regularly with customers and help them grow their businesses. Oiko likes to partner with financial institutions that promote ethical practices and the greater social good.

These are the benchmarks used while giving out credit that totals €800 billion globally, 14 per cent of it is in Africa. We have so far extended credit to different Rwandan projects to the tune of €2.9 million since 2012.

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