Rwanda targets to achieve 80 per cent financial inclusion by the end of the year. In fact, studies, like the FinScope survey that was released this year, have indicated the country has already surpassed this target.

Rwanda considers financial inclusion as an enabler for achieving its development and poverty reduction objectives. John Rwangombwa, the governor, National Bank of Rwanda (BNR), says the country has set an ambitious goal of achieving 100 per cent financial inclusion by 2020.

The question is, however, what should be done to realise this ambitious target. Sector experts say ensuring strong links between banks and saving groups will help in the realisation of the objective.

Keith Jefferis, a BNR consultant and former deputy governor National Bank of Botswana, believes Rwanda can leverage both informal and formal inclusion to achieve its targets. He urges banks to look at the informal financial services as complimentary to what banks offer and support them to boost financial inclusion.

"This way, it becomes easy for banks to work with those offering informal financial services, like village saving groups, to increase access to credit,” he says.He notes that strong linkages between the two are crucial to ease access to financial services.

Rwangombwa says the progress toward attaining financial inclusion targets is promising. The FinScope survey estimates that Rwanda has already surpassed its financial inclusion targets, with more than 89 per cent of adult population accessing financial services.

Saving groups

The FinScope 2012 and 2016 studies revealed that 30 per cent of the Rwandan population use informal means to access financial services. This brings to the fore the important role villages or community-based saving groups are playing, not only in the lives of the poor people, but also in the entire financial sector."Saving groups enhance financial literacy and financial capability of members,” Ivan Murezi, an expert at Access to Finance Rwanda, says.

Bernard Mugabo, a project co-ordinator at Care International, says though the groups have the potential to boost financial inclusion, they lack capacity due to limited access to finance.

"Access to finance remains a major challenge since most of these groups are not legally recognised. This makes it hard for banks to fund them due to the risks involved,” Mugabo says.

However, Judith Aguga, the Access to Finance Rwanda technical director, urges banks to tap into this market segment, saying it provides them enormous growth opportunities."They have to look at the rural market as a growing market and work with saving groups to improve access to finance.”

Aguga adds that most Rwandans live in rural areas, adding that it is the duty of banks to ease access to services by the poor.

"There should not be any excuse for banks to shun this market and help transform saving groups into formal financial services providers,” she notes.

Ging Ledesma, the Oiko Credit International director for social performance and credit analysis, recently told Business Times that lending to poor people, even those with no bank accounts, arguing that banks should promote responsible financing by putting the client at the centre of everything they do.

This is what financial inclusion is all about. She adds that it is only possible "when formal finance institutions work with saving groups to help balance the social objective with financial objective to achieve sustainable financial inclusion”.

"Banks should offer technical assistance to these groups to help them grow their business,” she notes. She adds that supporting the groups will improve access to finance which will, eventually, translate into increased formal financial inclusion.

Savings groups map

Access to Finance Rwanda, in collaboration with savings group promoters and Ministry of Finance and Economic Planning, has developed a saving groups map to demonstrate how they contribute to financial inclusion.

The map, that was launched recently in Kigali, will help provide additional financial intervention to group members.

According to the map, between 2010 and 2014, a total of 28,023 saving groups were created. More than 32.2 per cent of the country’s savings groups are based in the Southern Province, followed by Eastern Province with 30.3 per cent, while Northern Province has 17.5 per cent (or 4,917 groups), 16.5 per cent are Western Province, while Kigali City has only 3.3 per cent of the savings groups.