Financial inclusion among the youth in Rwanda increased from 88 per cent in 2020 to 94 per cent in 2024, according to the Finscope 2024 Youth Financial Inclusion Thematic Report by Access to Finance Rwanda (AFR). The report’s findings were presented on October 24, 2024, during the Young CEOs' Brunch meeting in Kigali.

The meeting brought together young entrepreneurs, and key actors from the financial sector, including financial service providers, non-bank financial institutions, fintechs, policymakers and regulators, the private sector, and development partners.

The report’s findings presented at the meeting show that the financial exclusion rate among Rwandan youth has dropped significantly from 13 per cent (260,000) in 2020 to 6 per cent (200,000) in 2024.

Secondary students and unemployed youth face a significant financial exclusion rate of 14 per cent while formally employed youth boast a 100 per cent financial inclusion rate, with a higher likelihood of being banked.

The financial inclusion gap between male and female youth continues to decrease.

In 2024, 95 per cent of male and 94 per cent of female youth are financially included, representing a mere 1 per cent disparity.

The disparity in financial inclusion between rural and urban youth has drastically decreased from 10 per cent in 2020 to just 1 per cent, with 94 per cent of rural youth and 95 per cent of urban youth now financially included.

Addressing challenges

Young entrepreneurs in Rwanda still face some constraints that hinder their ability to fully contribute to the country’s economic development.

These challenges include access to financial services to secure capital, limited collateral, and lack of tailored financial products for youth-owned enterprises, limited financial literacy, market linkages, and an environment that is not maximally enabling.

"It is evident that young people are the backbone of the country’s sustainable economic growth. Therefore, it is our shared responsibility to hear their voices and jointly discuss appropriate solutions to meet their financial needs.

"One of the most effective ways to address challenges facing young people is to deeply investigate their root causes to design evidence-based policies, strategies, programmes, and financial solutions,” said Jean-Bosco Iyacu, the Chief Executive Officer of Access to Finance Rwanda (AFR).

The report’s findings, he noted, will guide financial service providers.

It highlights that 18 per cent of the youth (especially those between 25 and 30 years old) are currently banked. Other youth use non-bank financial institutions, meaning they have access to other formal financial services.

The drivers of other formal financial inclusion include mobile money, Umurenge SACCO, insurance, pension, and MFI institutions, while drivers of informal mechanisms include savings groups, shop credit, and village associations.

About 25 per cent of the youth also have access to insurance products from formal financial institutions, up from 12 per cent in 2020, according to the report.

It shows that 75 per cent of youth possess mobile money accounts, while 85 per cent use mobile money. The report indicates 81 per cent (2.9 million) of youth reported savings in the past 12 months.

It says half of the youth (54 per cent) have accessed credits (with only 18 per cent formal). However, there are still barriers to credit access.

The report indicated that 21 per cent faced barriers in accessing credit since they did not have security or collateral, 6 per cent did not meet the requirements, 34 per cent didn’t need to borrow money, 21 per cent were worried they would not be able to pay back the money, and 4 per cent don’t believe in borrowing money.

Iyacu revealed that Access to Finance Rwanda is also working with financial institutions to provide portfolio guarantees of [up to 70 per cent] to youth with small enterprises who need access to loans but have no collateral.

He made the case for awareness among the youth about opportunities such as institutions that provide guarantees for loans.

"There is a need for capacity-building among the youth so that banks trust and provide loans to them. The ministry of youth and partners in finance should prepare youth so that when they seek financial services, they are ready and can easily access them. They need the capacity to compete,” Iyacu said.

Recommendations

The Access to Finance Rwanda report has recommended disaggregated data to provide valuable insights for regulators and policymakers to track progress on national financial inclusion strategies in terms of gender and age.

It pushes financial education to ensure that young individuals acquire essential financial knowledge, skills, and habits to navigate the economy effectively and secure their financial futures.

"Specifically, the focus should be on strengthening vocational training, apprenticeships, and mentorship schemes to equip young people with valuable skills and hands-on experience.”

The report emphasises that digital literacy must become a cornerstone of skills development initiatives.

The banking sector, it suggests, can propel growth and financial inclusion by developing tailored financial products and services (including digital).

"This can also assist in increasing the number of youths with transactional accounts. Enhancing quality of inclusion: This requires empowering youth with accessible financial tools to access more financing opportunities that respond to their needs.”

It adds that savings and affordable credit instruments are crucial for building financial resilience, improving overall financial well-being, and fostering economic stability.

Consolidating incentives that unlock youth-centred tailored financial products and services has also been highly recommended.

Reactions

According to Vincent Munyeshyaka, the Chief Executive officer of the Business Development Fund (BDF), they give credit guarantees of up to 75 per cent to youth [without collateral] in need of finance in banks.

"Youth make up 28 per cent of our portfolio. This is not enough.” However, he said there is a need for a one-stop service centre for youth in terms of access to finance.

"BDF and financial institutions should strongly partner to achieve this. If a bank receives an application, it interacts immediately with BDF because our processes are very long. BDF has its own processes and banks have their processes. We should have one framework to support youth,” he said.

He urged youth to understand the market needs to build trust from financial institutions.

"Do much market research, and much consultation with potential customers to make sure that if they come up with a product, it is ready to be used. There is also a need for awareness among youth about financial products,” he noted.

Grace Ishimwe, the CEO of IG Wear Rwandan Ltd, a company that produces fashion products, called for diversification of incentives for young entrepreneurs, including tax exemption, guarantees, and grants.

"Youth need enough capital. They lack the collateral to get loans. Even after starting a business, they need flexibility in charged taxes,” she said.

Young entrepreneur, Francis Musinguzi, the CEO of ‘Sinan Frank’ General Supply Limited, said there is a need for skilled bank labour capable of analysing youth projects and providing advice, adding that collaboration between BDF and banks also still has gaps.

Tony Francis Ntore, the Chief Executive Officer of Rwanda Bankers’ Association (RBA), said the Rwanda Academy of Finance (RAF) was also created to train bank staff to minimise knowledge gaps in analysing the projects and products for youth.

He said there is a need to create a platform for youth with business ideas and bankers’ associations. He called for increased financial literacy and investment readiness among the youth.

"Youth have to read and get informed about the financial products,” he said.

The Minister of Youth and Arts, Abdallah Utumatwishima, said that the meeting to discuss access to finance among the youth could be held annually to devise solutions to the revealed challenges based on the evidence.

"It is good news that BDF is also streamlining services to the youth to address such challenges,” he noted.

He also said a one-stop centre for financial services could help raise awareness about all incentives for the youth.

Antoine-Marie Kajangwe, the Permanent Secretary in the Ministry of Trade and Industry (MINICOM), said increasing financial inclusion among the youth will spur job creation under the 2nd National Strategy for Transformation (NST2).

"This requires a collaborative approach to achieve the targets,” he said.

Rwanda has set itself a target of creating at least 1,250,000 decent and productive jobs for the next five years, and trade unions will play a big role. That is equivalent to 250,000 jobs annually.