Banks in bullish mood ahead of 2011

Experts in the financial sector said the industry experienced exceptional reforms last year as well as various developments which are in initial stages.

Bankers told Business Times ahead of the New Year that new technologies had been introduced in the industry, banks opened branches across the country among other achievements that have helped to simplify doing business.   

The Managing Director of Rwanda Commercial Bank (BCR), Sanjeev Anand said that "This is a very exciting and very dynamic times for the banking industry. For instance we were able resolve the ATM network challenges, which enabled us to boost our payment systems.”

He added that "Along the way we instituted real time settlement systems, which are pointers of the deepening that has been done. Solid foundations have been laid and my senses are that very early next year, we are very likely to see a quantum jump in service offerings within the entire sector.”

For KCB Rwanda, the year 2010 has been more about getting to learn the local terrain.

The Managing Director of KCB Rwanda, Maurice Toroitich said "This year for us has been a steep learning curve in terms of getting to understand the needs and expectations of our customers due to the fact (that) we are Rwanda’s newest bank.”

He added "For us next year, it will be about better service delivery as we are now known to be very bullish and proactive. We expect to hit our target of growing our current market share of 7 percent to higher levels next year.”

Gov’t moves to bridge rice deficit
Government has indentified 35,000 hectares of marshlands for rice production to increase the crop’s yield and counter the heavy import bill, according to agriculture minister Dr. Agnes Kalibata "With 35,000 hectares up from 12,000 hectares of rice production, we will be able to meet our demand, it’s a breakeven.”

Domestic rice output reached 246, 372 tonnes last year, 54,795 tonnes less than the market demand of 301,167 tonnes. The country relies on imports to cover the deficit.

The 35,000 hectares of marshlands identified across the country are contained in a five-year plan, the Minister said, adding that Rwanda can do better in rice production.  

In a similar move to increase rice production, government is piloting a project on upland rice production. 

‘Golden Mountain No.1’, which was piloted and has proved suitable to be produced on Rwanda’s uplands, is known for its early maturity which requires only four months to be harvested.

Wetland rice takes about six months to mature. This type is said to have performed well compared with the other four varieties that were tested.

Rwanda plans influential business reforms in 2011
It was reported that as a way of boosting private investments so as to sustain the country`s economy, Rwanda will next year continue effective implementation of business reforms.  

For Rwanda to attain its development goals, the country needs to achieve a sustained GDP growth rate of approximately 8 percent.

Currently, the country needs to achieve a sustained GDP growth rate of approximately 8 percent in order to achieve its development targets. 

According to the eighth publication of the International Finance Corporation (IFC) and the World Bank, a report on doing business for 2010, Rwanda moved up 12 positions. Rwanda was ranked the 2nd best reformer, only beaten by Kazakhstan.

"We were inspired by the 2010 results to even do better especially on indicators that were more challenging,” Monique Nsanzabaganwa, the Minister of Trade and Industry said while commenting on the Doing Business findings.

While the business environment has progressively improved, Nsanzabaganwa said the country will continue to deepen the reforms to facilitate the business community.

Increased competition triggered prudent banking in 2010
Reports indicated that last year, licensed banks steadily adjusted to the reality of the fast changing economic landscape in Rwanda. Bankers were able to adjust to the new approaches within the practice of banking.

It was also noticed, that the sector witnessed a profound readjustment in how individual players did business by revaluating changing industry cost structures, and other related market conditions.

Readjustments that have been carried out by cutting down on operational costs in the industry, were meant to enable bankers to jostle for more market share, at a time margins were dwindling partly due to the increased competition.

Banks for instance went into an overdrive to embrace new banking practices and adopted new technology that was meant to reach out to customers, through opening up of new branches while some went as far as trying to reach out to clients by offering them business training packages.

These were some of the features of the fast changing landscape that has been the face of the banking industry in Rwanda during the course of the year 2010.

The Chief Executive Officer (CEO) of Rwanda Commercial Bank (BCR), Sanjeev Anand said "We are launching and initiating a training programme that is meant to improve the financial and accounting standards of some SMEs that bank with us. We will arrange for experts to facilitate this programme.”

He said that the $75,000 programme would be rolled out in close concert with other institutions. The combination of such new approaches meant that banks increasingly got closer to their retail, corporate and international customers through adoption of new technology and new branch networks and new working relations with their clients.

New players such as Actis, Rabo Bank, Ecobank, Access Bank, Fina Bank and Kenya Commercial Bank (KCB) in the last 3 years brought in a new generation of bankers who are eager to understand and serve their clients.

The net effect is that banks are now able to post healthier results.

Gov’t raises Rwf10b from treasury bonds
According to the Capital Market Advisory Council (CMAC), government raised Rwf10 billion this year through the issuance of treasury bonds.

Statistic indicated that government continues to dominate activity on the country’s budding capital market.

While there was a decrease of 30 percent in the primary bond market, compared to 2009 when government raised Rwf14.5 billion, in 2010 eight government bonds were issued with maturities ranging from 2 to 5 years with coupon rates of 8 to 11 percent.

The Deputy Executive Director of CMAC, Olivier Kamanzi, said that bonds issued are part of the government’s wider efforts to encourage the performance and growth of the stock market.

Kamanzi told Business Times that "Today they (private sector) do not have enough resources to support themselves.

Lets face the reality; over 90 percent of our businesses in Rwanda are micro and small enterprises; most of them do not meet requirements of the market to be listed.”

The activity on the equity market was also very low with only two cross listings from Kenyan firms, Kenya Commercial Bank (KCB) and Nation Media Group.

Ends