Senators have called upon the central bank to exert pressure on commercial banks whose interest rates have remained prohibitive yet the Repo Rate has been moderately controlled.

This emerged last week as members of the Upper Chamber scrutinised the revised national budget which saw more than Rwf40 billion added to the earlier figure of 1.76 billion, translating into a 2.2 per cent increase.

While the lending rates, on average, treaded at 17.4 per cent last year, so far commercial banks in Rwanda have kept their interest rates between 16 per cent and 24 per cent although the regulator, which is the National Bank of Rwanda, has kept the key Repo Rate constantly at 6.5 per cent since June 2014.

Repo Rate is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds.

Among the concerns raised by the lawmakers were the high interest rates among private bankers who have now turned to buying local bonds and lending to big businesses.

Although members of the Senate resolved to convene a special interactive session with bankers and government officials in charge of banks to discuss the way forward, they said loan seekers’ hope to secure credit has largely been down to sheer lack or corruption.

According to Senator Marie Claire Mukasine, for a low wage earner to borrow a 12-month advance salary, he or she has to fight hard to get a loan even at a very high rate.

"It’s like giving them a favour. There is a need to closely look into this matter,” she said.

Senator Mike Rugema said commercial banks have been acting so due to low capital, which is often channeled to avenues, that bring quick returns like bonds and or capital markets.

"These banks decide to loan big companies like Bralirwa or telecoms because they are assured a return and profits or they decide to invest the money in local bonds, which are steady longtime investments than ordinary loans,” he said.

Efforts to reach officials from commercial banks were futile by press time although previously bankers had said interest rates varied from one bank to another and that they were forced to work within limited capital because of low deposits from local clientele, hence resolving to borrow from costly outside markets.

Explaining the midyear revised fiscal budget in parliament earlier, Claver Gatete, the Finance minister, told lawmakers that there had been a gradual recovery in economic activity after the 2013 slowdown.

According to reports, economic performance in 2015 was affected by an unanticipated external shock to the country’s main exports, especially minerals, where a sharp drop in prices and global demand resulted in an unexpected significant loss of export receipts and international reserves of the banking system.

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