Rwanda’s savings rate as a percentage of gross domestic product (GDP) stood at 12.5 per cent by the end of 2023, dropping to 11.3 per cent in the first quarter of this year.

The government had targeted to achieve a 23 per cent savings rate by the end of 2024, a target that seems unlikely given the negative trend that has been observed since the advent of the Covid-19 pandemic.

The country’s savings rate had increased to 16 per cent in 2021, before falling to 15 per cent in 2022 and further in 2023 due to a combination of macroeconomic challenges that hit the economy.

Herbert Asiimwe, Head of Financial Sector Development at the Ministry of Finance and Economic Planning, said the effects of COVID-19, geopolitical challenges such as Russia-Ukraine conflict, the Red Sea chaos, US Taiwan-China tensions, and climate-related hazards caused price increases and put pressure on disposable income.

Despite Rwanda not attaining its target, the recent Finscope survey showed that the country was on track to increase its savings with adult savings currently standing at 85 per cent (6.9 million adults).

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Jean Bosco Iyacu, the CEO of Access to Finance Rwanda, attributed this increase primarily to initiatives such as Ejo Heza, a long-term savings scheme championed by the government.

Ejo Heza in particular has attracted 3.2 million depositors who have collectively contributed Rwf60.5 billion with its total assets under administration amounting to Rwf62 billion.

However, overall savings levels have not increased significantly.

"This means that in order to encourage the mass market to save more, financial service providers need to innovate more. To do this, they need to work with policymakers, regulators, and innovators to champion the cause for the upcoming years,” Iyacu said.

Rwanda is counting on initiatives such Iterambere Fund to encourage savings. Under the fund, managed by the National Investment Trust (RNIT), the number of individual investors with savings accounts has increased from 7,145 to 25,644 over the last three years.

The Fund’s current assets under management has increased from Rwf18.31 billion to Rwf42.82 billion in the same period.

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Aguka Fund has also proven to be a stable and competitive option for savers, contributing to the increase in national savings, as Darius Mukiza, Head of Fund and Management at BK Capital, explained.

Aguka Fund has been able to offer a high level of current income, which has outpaced traditional bank deposits and Treasury bills.

"The role of Aguka in this achievement underscores the importance of innovative financial instruments in promoting a culture of saving and investment in Rwanda,” Mukiza noted.

Gov’t stepping up efforts

According to the Ministry of Finance and Economic Planning, the government has put in place policies and procedures to encourage Rwandans to save, such as financial education efforts that have been there for the previous decade to help people understand financial services and the value of saving.

"One of them was the promotion of Umurenge SACCOs in 2009 to improve access to financial institutions and credit facilities, as well as policy decisions on tax breaks for savings and dividends from investment,” Asiimwe said.

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According to Asiimwe, the government currently works with financial institutions to promote savings through various initiatives, including regulating investment schemes through the Capital Market Authority.

Other initiatives include affordable loan and guarantee institutions through Business Development Fund(BDF) and the Development Bank of Rwanda (BRD), as well as implementing financial inclusion and financial education plans.