The Rwandan financial sector, which includes banks, microfinance institutions, pension and insurance sectors, as well as non-deposit taking institutions, among others, registered tremendous growth in the first six months of this year, with combined assets growing by 20.8 per cent, reaching Rwf11,6 trillion.

This growth rate exceeds the five-year average of 18 per cent, and it was driven by improved efficiency, higher deposits, increased contributions, and rising investment income, the National Bank of Rwanda (BNR) indicated.

Assets of the banking sector – the largest sub sector - grew by 21.2 per cent, largely due to growing deposits, efficiencies and increased capital, aimed at supporting business expansion.

Pension sector assets grew by 16 per cent, supported by rising contributions and investment income. The insurance sector's assets increased by 17.6 per cent, driven by growth in premiums, investment income, and increase in capital.

Microfinance institutions (MFIs) experienced the highest asset growth at 36.4 per cent, mainly driven by the shift of three banks to MFI. Deposits in the MFI sector, grew by 137 billion, with 16 per cent of this increase attributed to deposits from the three banks.

Consequently, the asset-to-GDP ratio of the financial sector increased to 65.6 per cent in June 2024, underscoring its expanding role in the economy.

This growth clearly speaks to a sector that has grown to levels that are quite impressive, even when you compare to the regional peers. For instance, Rwandan and Kenyan banks were the only countries in the region whose return on assets sit well above 20 per cent.

However, the big question remains whether the profitability that the sector has registered reflects efficiency gains to consumers. It is very critical for the industry to extend their role in sectors that benefit majority of Rwandans such as increasing their lending activities to the agriculture, which for the longest time, has been ignored by banks.

Insurance companies, too, have a responsibility to extend their services to sectors that benefit the masses without only caring about their profit margins. There’s no question that ultimate goal is to maximise shareholder value, but balancing the needs of their shareholders and those of their clients will ensure sustainability.