Rwandan banks spend between Rwf18 billion and Rwf20 billion annually handling cash further pointing to the extent of cash dominance in the economy.

Rwanda Bankers’ Association President Maurice Toroitich explained that cash dominance drives up the cost of operations among local banks.

The cost of handling cash is higher than the profits of the all local banks with the exception of Bank of Kigali.

Toroitich said that further analysis shows that banks spend between Rwf3 billion and Rwf5 billion transporting cash, an expense which would have been avoided with further uptake of cashless payments.

Other costs incurred in handling cash includes cost of insurance, losses in cash handling, paper work among others.

The Government also incurs growing cost due to the dominance of cash in the economy. For instance, National Bank of Rwanda Governor John Rwangombwa said that the cost of producing currency is estimated at $1.5 million annually.

He, however, noted that the cost of handling cash was much higher as it takes multiple forms. The Central Bank has launched a campaign seeking to drive uptake of cashless payments and transactions.

The campaign, among other things, seeks to look into issues that could be holding back cashless payments and transactions as well as encourage the public to embrace the trend.

Eric Rwigamba, the Director-General of the Financial Sector Development at the Ministry of Finance and Economic Planning, said that dominance of cash in the economy was also getting in the way of access to credit for SMEs and start-ups due to the lack of financial history.

Cashless penetration is measured by aspects such as volume of transactions, usage, footprint of infrastructure such as point of sale machines, value of e-payments to Gross Domestic Product which currently stands at 34.6 per cent.

Currently, there is evidence that there is much to be done in various aspects. For instance, in Rwanda, for 100,000 people, there are only 39 point of sale machines while in economies such as Singapore, the number is estimated at over 700.

Also, despite the increase in volumes and value of mobile financial services, further review of the data shows that a majority of it goes to airtime purchases, cash-in and cash-out (Money transfers).

editor@newtimesrwanda.com