Banks, wealth and broader outlook

Over the last decade and half Rwandans have built an enviable country. This is no exaggeration. Nationals created it and are justifiably proud. Friends see the evidence and applaud the progress. Detractors have no choice but to admit what they see, albeit grudgingly. Even the willfully blind cannot alter the reality. All they can do is try to wish away what exists. But as everyone knows wishes are just that – wishes. They do not change to fact. The cause for both the admiration and resentment is the long and growing list of achievements that includes: consistent economic growth; zero tolerance to corruption; the restoration of the environment to almost a pristine condition; booming construction industry; a friendly business climate; increasing access to education at all levels; improved health care services available to all citizens; sporting success; a governance system in which all citizens have a role and voice. And many more. However, there is one area of growth that has gone almost unnoticed. Or perhaps it is a case of spiteful vanity - turning a blind eye to what exists in the vain hope that Rwandans will be denied their credit. There has been huge growth in the banking and financial services sector in the last decade in terms of number and type of institutions and network coverage. In 1994, there were only two commercial banks in Rwanda – Banque de Kigali (BK) and Banque Commerciale du Rwanda (BCR) and one cooperative and savings bank, Banque Populaire (BP)Of these only BP had branches countrywide. The others had branches in Kigali’s business district.Another characteristic was that, with the exception of BK which had some Belgian shareholding, all the others were entirely owned by Rwandans. That in itself was not a bad thing. But it had its obvious disadvantages. There was small mobilization of domestic savings, and, as a result, limited capital available for credit and capital development. Expertise was also limited. The small financial services sector reflected another aspect of the country at the time. Rwanda was run by a group who had closed minds, partly by design and partly because they lacked the exposure and confidence to open to other influences. The country sorely lacked the broadening influence of external contacts. When William Wallis writes of an inward looking Rwanda, he must surely be referring to this period because the current Rwanda is anything but. The closed nature of Rwanda had disastrous consequences on the mindset of citizens and on the economy. It led to heavy reliance on donations and handouts from outside. The people came to expect these as a matter of course. Now, anyone who picks your bills also controls what you spend on. The resulting dependency and control meant that Rwandans surrendered their independence and did not decide their own priorities. Because of a closed mentality and dependency, the leadership did not attract foreign investment. That has now changed. The country has opened up to the outside world, and this is reflected in the recent growth in the banking sector. Since 1994, more than eight new banks, some of them foreign-owned, others with foreign shareholding, have set up offices in Rwanda and opened branches around the city and in upcountry towns. Rwandan banks have done the same, spreading their network of branches across the country. Recent times have also seen modernization of payment systems through such methods as mobile banking which has made the transfer of money easier, faster and safer. Even people living in the remotest parts of this country and of whatever station have access to this facility. The expansion of banking in Rwanda has brought with it more capital, greater expertise, more competition and better services. The same period has also seen increased growth in savings and cooperative societies (SACCOS) leading to more mobilization of domestic savings and growing small-scale investments. The latest developments in the banking and financial services sector are bound to have a very strong impact on poverty alleviation. They will also broaden the outlook of Rwandans. Despite this growth, the financial services market is still open to more investment. According to the Rwanda National Bank (the Central bank) only 20% of Rwandans have access to banking services. With the expansion in banking and other financial services, another item has been added to the growing list of achievements of Rwandans. And more significantly, the economic growth and wealth of Rwandans can only be attributed to the hard work of Rwandans and focused national priorities. Reasons for this success should not be looked for outside Rwanda, as those not willing to accept the evidence of their eyes are wont to do.We will no doubt hear more denials of Rwanda’s achievements. But that will not alter the facts. jorwagatare@yahoo.com

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Banks, wealth and broader outlook