The push by government for Rwanda to achieve a cashless economy is slowly gaining ground with more and more financial institutions embracing and promoting financial technology (fintech). Presently, the majority of banks have rolled out technology-driven services and solutions, a development that has helped them increase options to enhance services as well as enable customers to make transactions easily and deepen inclusion.

The government considers financial inclusion as an integral enabler for achieving its development and poverty reduction objectives as embodied in both Vision 2020 and second Economic Development and Poverty Reduction (EDPRS II).

However, industry players say there’s still a long way to go to achieve a cashless economy, replacing paper money or coins during financial transactions with digital solutions enabled by debit or credit cards, among other facilities.

It was under the backdrop that KCB Bank Rwanda recently hosted experts from the ICT and banking sectors in Kigali to discuss ways on how to promote financial technology (fintech) and uptake of e-financial services and instruments. During the deliberations, experts agreed that there’s still more to be done to encourage and accelerate the adoption of financial technology in Rwanda.

According to Lucy Mbabazi, the country manager of Visa, sector players have to embrace technology and promote innovation to be able to transform the financial sector and hence support Rwanda’s goal of a cashless economy in the medium to long-term.

She says this is also essential to drive growth and create jobs, adding that the country still has a lot to do to achieve these objectives.

"Fintech is in place to expand and deepen merchant and consumer relationships, as well as ease access to services by the masses. It makes it easier for people to transact besides boosting financial institutions’ efficiency and service delivery.”

What the figures say

Mobile technology continues to play a big role to enhance electronic payments with the aim of creating an inclusive cashless society.

National Bank of Rwanda (BNR) figures show that debit cards went up 746,458 last year from 657,904 in 2015, while credit cards increased from 3,485 to 3,668. The number of ATMs increased by 5 per cent between December 2015 and December 2016 to 400, up from 380, while POS devices rose by 10 per cent from 1,718 to 1,885 driven by increased demand from merchants like new hotels.

The number of ATM cards increased by 14 per cent from 661,389 in December 2015 to 754,384 in December 2016. In addition, transactions on ATMs increased by 9 per cent from 7.5 million to nearly 8.2 million in volume, and by 15 per cent from Rwf354 billion to Rwf406 billion in value. POS transactions increased by 77 per cent from 373,029 to 660,746, in terms of volume, and 56 per cent from Rwf26.6 billion to Rwf41.5 billion in value. The ratio of electronic retail payments transactions to GDP rose from 0.3 per cent in 2011 to 21.6 per cent as of end December 2016, according to BNR.

More needs to be done

However, experts say these figures are still very low considering the country’s ambitious push for cashless economy and e-financial services.

Maurice Toroitich, the managing director of KCB Bank Rwanda, says though there’s a need to hasten the adoption of fintech in the country, it should be noted that it is a gradual process and could take longer in developing countries like Rwanda.

He says the reason why some of the ICT innovations take shape quickly is that they are solving operational and access challenges faced by the sector.

"When we get to the point when the majority of people fully understand that using non-cash payment solutions solves challenges, including reducing risks involved in carrying cash, that’s when we will start seeing high rates of adoption,” he says.

With about 90 per cent of the population involved in informal activities, Toroitich notes that this presents a challenge to efforts aimed at fast-tracking the transition to cashless economy.

He says this is a big a challenge "because we don’t know how informal sector players earn their income or even how they spend it”.

"However, some of these people are slowly being included into the formal business ecosystem with the introduction of mobile payment solutions. Now banks have started to track their income and payment patterns. With adoption of fintech, we will also be able to support them through lending services,” he explains.

Toroitich who’s also the chairperson of the Bankers Association in Rwanda, says with banks, KCB Rwanda and telecom firms, is introducing mobile loans, more informal sector players will be able to open accounts using their mobile phones. He believes that these are some of the fintech solutions that banks and other financial sector players must adopt to fast-track the transition to a cashless economy.

He says these solutions will encourage people to save, make payments and other financial transactions.

"Based on this history, we’ll be able to credit-score and we pre-approve their loan applications. This will remove the need for people in rural areas to go to banks for small loans as they can apply for credit on their mobile phones. With these kinds of facilities, the acceptance and adoption levels will increase fast,” he argues.

For Louis Antoine Muhire, the founder of Mergims, an online payments platform for Africans in diaspora, the growth of financial technology has significantly contributed to the way businesses access or offer services.

"The growth of fintech is pushing up traffic and easing the services delivery. For instance, Mergims has boosted online remittances by Africans abroad. This is a big indicator of how financial technology can create huge change and accelerate economic growth,” he says.

According to Toroitich, the population needs, not just digital literacy, but also the understanding of what these technological innovations can do to solve their financial challenges and deepen savings, as well as income-generating activities.