The International Finance Cooperation will assist Rwanda to come up with necessary draft laws that will be used in the regulation of the planned Credit Reference Bureau (CRB). IFC is the investment arm of the World Bank Group. The country is set for the first CRB and Compuscan information technologies has been asked to work in the country. Compuscan is a South African credit bureau that provides consumer and commercial credit information. François Kanimba Governor of the National Bank of Rwanda (BNR) said that the project will be public private partnership. For its effectiveness, financial experts say that the CRB needs a proper regulation framework which gives banks more confidence to extend credit to the private sector, mainly smaller businesses. Kanimba revealed that IFC is assisting government to come up with proper regulations. The development comes a few weeks after the central bank said that the soundness of commercial banks was reinforced in 2008 and all banks have strengthened their activities. This is said to be a direct result of the entry of regional and international banks in the Rwandan financial system. Rwanda’s banking activities, measured by the total balance sheet increased by 33 percent, from Fwf384.1 billion in December 2007 to Rwf511 billion in 2008, the central bank said in its monetary policy statement recently. The credit reference bureau is viewed as a crucial factor that will help commercial banks to meet BNR’s target of non-performing loans of seven percent. The level of non-performing loans is said to have reduced by 4.5 points from 13.8 percent in 2007. But the prevailing 9.3 percent is still undesirable by the Central Bank. No-non performing loans are loans that are in default or near to default. Experts say that too much non-performing loans erode banks’ profitability, something that may cause stagnation in the economy. Out of the eight commercial banks in the country, only three had NPL ratio in excess of 10 percent. Figures suggest that that consolidated net profit after tax was established at Rwf12.2 billion at December 2008 against Rwf6.1 billion in December 2007, a double increase. The credit reference bureau will also possibly increase access to credit through other lending institutions like the Micro Finance Institutions and stimulate their growth. MFIs in particular have been struggling in the Rwandan market. But recent statistics have suggested that there is an improvement in their activities. According BNR, based on the consolidated financial position of MFIs without CSS, the activity of MFIs has improved, with an increase of 45.8 percent in total assets, 35 percent and 66.3 percent in deposits and loans respectively. “There is also a significant improvement in the management of loan portfolio, delinquency rate has decreased from 16.1 percent at the end of December 2007 to 8.2 percent at the end of December 2008,” the monetary statement says. Ends
