We refer to an article "AAR on verge of departing Rwanda” published by The Rwandan Focus in its issue No. 146, 02-08 May 2011, pp.6 and on April 27, 2011 on the web: www.focus.rw. We were disappointed to read in the said article some misleading information about circumstances surrounding AAR operations in Rwanda.

The National Bank of Rwanda wishes to inform the general public and the readers of Rwanda Focus in particular that, the information contained in this article is not only incorrect but also full of distortions, lacks professionalism and investigation. The statement that AAR plans to close business in Rwanda because the National Bank of Rwanda is frustrating it with ‘wildly changing demands’ is a serious accusation that; any credible media would not conclude on without minimum investigation on all parties involved to understand the real facts surrounding the matter.

The National Bank of Rwanda wishes to respond to this article highlighting the Bank’s core mission, the insurance legal and regulatory framework, the capitalization policy of the insurance sector and its objective among others.

BNR’s mission in supervising the financial institutions

The National Bank of Rwanda is mandated by the Law No. 55/2007 of 30th November 2007 to supervise the financial institutions (Banks, Insurance companies and Pension schemes), and in particular the Law No. 52/2008 of 30th September 2008 to supervise the insurance sector and the rationale of this responsibility is to protect the public interest by ensuring that the supervised institutions are financially sound and stable.

How does the National Bank of Rwanda achieve this?

In order to achieve the above mandate, the National Bank of Rwanda has put in place the supervisory and regulatory framework of the supervised institutions; and in this case we will focus on the insurance supervisory and regulatory framework since the article by Rwanda Focus was on AAR Rwanda; a medical insurance company under BNR supervision.

National Insurance Commission

We wish to inform the general public and the readers of Rwanda Focus newspaper that the National Insurance Commission (NIC) mentioned by the author as the insurance regulator in the country ceased operations since August 2007 when its mandate was reassigned to BNR. This illustrates how the reporter is ill-informed about the subject matter.  

Insurance legal and regulatory framework and capital requirement

The law governing the organization of insurance industry in Rwanda and its implementing regulations that Rwanda Focus refers to with capitalization requirement of 100,000,000frw had been into force since 1975. This law has only been reviewed once; that is on 29/07/2009 with Law No.5/2009 as published in the Official Gazette No.34bis/23/08/2010. The regulations implementing this new law have also been published; including the regulation on licensing requirements for carrying out insurance business. Article 4 of this new regulation states that: "A person proposing to carry on short and long term insurance business shall have a minimum paid up cash capital of not less than one billion Rwanda Francs (1,000,000,000 frw)”.

Going by this provision the National Bank would like to clarify a few issues that were distorted by the Rwanda Focus reporter.

The law is universal and not specifically designed for one player. Also the Rwanda Insurance law governing the insurance sector does not segregate against local or foreign investors like the writer wants the readers to believe ["this is how capitalization requirements has been erratically hiking for insurance companies looking to invest in Rwanda].
Secondly, the figures presented by the reporter as "erratic hikes on capital requirement” by BNR are in fact figures of the capital build up plan provided by AAR  to BNR to be able to achieve the capital requirement as provided by the law. This was a special arrangement for the ailing AAR to support it from becoming insolvent because it could not afford a-one-pay-up cash as required by the law. This shows the writer’s ignorance and lack of facts on the matter.
Insurance business in Rwanda is divided into two categories namely: short and long term insurance where under each are a number of insurance products ranging from medical, motor vehicle, fire, industrial, ordinary life, etc). The minimum capital requirement as mentioned above in Article 4 is 1,000,000,000frws for short and long term insurance business company. AAR applied for only short term insurance business – medical insurance. AAR therefore could not be exonerated from meeting the minimum capital requirement because it was transacting medical insurance only. Instead, AAR was at liberty to engage into other insurance products if it wasn’t making profits with one insurance product.
The National Bank of Rwanda also wishes to inform the general public that, in its letter dated 11th February 2011, it was a deliberate decision by AAR Group Chief Executive Officer, Mr. Jagi Gakunju to wind up operations in Rwanda indicating AAR’s Exit Plan. AAR also indicated that it had no intention to pursue other lines of short term insurance other than health insurance. This had nothing to do with BNR or a bad insurance law. 

The National Bank of Rwanda’s Governor Shareholding in SORAS

The Rwanda Focus newspaper also alleges in the article that the Governor of the National Bank of Rwanda Mr. KANIMBA Francois has shares in SORAS a competitor to AAR, thus not only does this pose a conflict of interest but also undermines his ability to exercise impartiality within a sector that the Central Bank regulates.

The National Bank of Rwanda wishes to emphatically and categorically refute this as absolute lie and pure fabrication.

In Article 12 of the regulation on licensing for insurance companies, it is a legal requirement for every licensed insurer to disclose information on the names and addresses of Directors and shareholders. We therefore wish to categorically state that according to information sheet disclosed by SORAS of its shareholders, Mr. KANIMBA Francois is not a shareholder in SORAS insurance company (life/non life). The reporter’s allegations are therefore baseless and with hidden sinister motive. We challenge Rwanda Focus to produce any documentation that justify its allegations. 

Legal and Regulatory processes

Lastly, the National Bank of Rwanda would like to inform the public that the processes involved before any regulatory framework is concluded is rigorous and inclusive. It is a wide, consultative process in which the players and all stakeholders are involved in the discussions of such laws and regulations so that they meet international standards.

The National Bank of Rwanda wishes to inform the entire Rwandan public not to be misled by misinformed and selfish individuals whose motive is yet to be established.

Once again, the National Bank of Rwanda operates an open-door-policy where anyone may freely find information without any impasse to avoid speculations like the ones published by The Rwanda Focus Newspaper.

Management
May 2, 2011