Rwandan consumers demonstrated financial resilience in the second quarter of 2024, with the majority expressing increased optimism about their income prospects for the coming year.

This is according to a new report by TransUnion Rwanda.

TransUnion, a credit reference bureau, indicated that 33 per cent of surveyed consumers said their incomes had increased in the previous three months (April-June), 22 per cent started a new business,and 21 per cent started a new job leading to increased income.

"Rwandan consumers are showing remarkable resilience in the face of financial challenges,” said Sam Tayengwa, TransUnion Rwanda chief executive officer.

The inaugural report, which measures shifting consumer behaviors and attitudes based on income, debt and identity theft dynamics, attributes the financial resilience to improvement in the country’s employment outlook.

According to the recent Labour Force survey by the National Institute of Statistics of Rwanda (NISR), unemployment rate in Rwanda dropped to the pre-Covid19 levels after 562,000 jobs were added in the first quarter of 2024.

This implies that the unemployment rate stood at 12.9 per cent in the same period, almost back to the pre-Covid-19 estimate of 13.1 per cent, meaning approximately one person was unemployed for every eight in the labor force,

The silver lining, TransUnion noted, 81 per cent of Rwandans are optimistic their income will increase in the coming year (2025).

"Their (consumers) optimism about future income prospects and the proactive steps they are taking to manage their finances is encouraging,” Tayengwa noted in a press statement.

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Promising prospects

An ease in inflation, which has seen commodity prices decrease from all-time highs in 2023, is expected to ease financial pressure on consumers and support household spending in the second half of 2024.

TransUnion indicated that consumers said in the last quarter that they were being cautious about their spending priorities, with many deciding to focus on the future where they prioritise things like debt repayments.

Others, 28 per cent to be precise, made deliberate choices to increase contributions to emergency funds during the quarter under review, the report indicated.

Similarly, 49 per cent of surveyed consumers said they plan to allocate more income toward bills and loans going forward. This points to a trend towards responsible financial management.

The report, however, pointed to reduced income prospects among some consumers, with some 25 per cent saying they witnessed a decrease in income in the period under review. At least 28 per cent reported job losses, while 18 per cent saw salary reductions.

This somewhat constrained the ability of some consumers to meet their monthly bills, with 42 per cent expressing concerns about fulfilling their existing financial obligations, of which 44 per cent are millennials (27-42 years old).

Of the consumers who are unable to pay their bills and loans in full, 37 per cent plan to seek assistance from friends or family, 35 per cent intend to make partial payments, and 33 per cent will dip into savings to cover the shortfall.

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Credit key to financial resilience

Consumers recognise access to credit as one of the key ways towards financial resilience. Almost all those who were surveyed, 98 per cent, emphasised the essential role that credit plays in achieving financial goals.

At least 37 per cent feel they have sufficient access to credit and lending products (particularly millennials at 42 percent) the report found.

During the second quarter of 2024, 51 per cent of consumers planned to seek new credit, with millennials showing the most interest (60 per cent).

However, of the 49 per cent who abandoned plans for new credit or refinancing over the quarter, 27 per cent cited high costs and concerns about income and employment stability.

Among those who intended to seek credit, 44 per cent contemplated new personal loans, 38 per cent considered student loans, with another 17 per cent planning to apply for a new home loan.