Despite the recent liquidity crunch in the banking sector, the sector has registered a significant growth in the last four years, netting Rwf80 billion in equity this year from Rwf21b in 2005, according to information from the National Bank of Rwanda (NBR).

The 280.9 percent growth has been attributed to the liberalization of Rwanda’s financial sector which has also attracted Rwf86 billion in form of investment capital in the last four years.

"The minimum share capital requirement for commercial banks was increased from Rwf1.5 billion to Rwf5 billion and this has helped stabilize our financial institutions from the effects of the global financial crisis,” François Kanimba, Governor NBR said on Tuesday.

The governor said that due to reforms in the banking system, recent performance trends in the sector indicate a positive shift in which consolidated total assets of the commercial banks have increased more than two folds from Rwf192.2 billion  at the end of 2004 to Rwf511 billion by the end of 2008.

The total gross loans in the sector have also increased by 194.6 percent from Rwf129b to Rwf380.1b in 2008 with a fall in non-performing loans from 40 percent in 2004 to 11 percent this year.

The reforms by the Central Bank have also boosted commercial banks’ total deposits from Rwf162.3b in December 2004 to Rwf381.9b in December 2008.

Kanimba said that commercial banks branch network will reach 74 branches by the end of 2009 with Bank Populaire du Rwanda having more than 100 sub branches across the country.

"All these achievements are quick indicators that Rwanda’s financial sector is steadily growing towards our ultimate objective which is to become a financial service hub in the region,” Robert Bayigamba, Chairman of the Private Sector Federation (PSF) said.

Bayigamba also noted that the entrance of regional and international banks has supplemented local providers in effort to minimize the current deficit between demand and supply of financial services in Rwanda.

However, the banking sector is still affected by low provision of services to the public with only 14 percent of Rwandan population accessing formal banking services while 26 percent have access to informal banking services and 48 percent financially excluded.

Kanimba urged the institutions to double their efforts and bring services closer to the people.

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