New strategies to boost financial inclusion

Rwanda has set its targets high including becoming a middle income country by the year 2020 with a per capita income of US$1000. Some of the characteristics of developed and middle income countries relating to financial sector include higher percentages of citizen’s access to finance. While access to finance in middle income countries like South Africa stands at 60 per cent, as of 2007, in Rwanda it is 21 per cent, according to a FinScope survey that was carried out in 2008. The central bank targets 80 per cent access to finance by 2017. “Given the pace at which Rwanda’s financial sector is evolving, our targets are high but achievable,” central bank Governor, Claver Gatete says. He cites the implementation of Umurenge SACCO, financial literacy campaigns as well as the introduction of Access to Finance Forums as some of the mechanism that will help meet the target. Reports so far indicate that many citizens have faith in Umurenge SACCO given the way they have registered membership and opened accounts with them. Many were reluctant at the start but present indications show overwhelming support for the program. For the simple reasons, SACCOs are accessible, better managed and prepared to account for citizen finances than previous COOPECs. In partnership with districts and Sector authorities, the central bank introduced Access to Finance Forums. These are a result of the recommendations of the government Umushyikirano which took place at the end of last year. Access to Finance Forums will be mainly mandated with mobilizing and sensitizing the population to join financial institutions. The forum will also be training the population about getting loans from financial institutions as well as building the culture of loan repayment. The forum will be equally responsible for identifying constraints met by financial institutions and recommending mechanisms of resolving them. The central bank in partnership with Rwanda Cooperative Agency and the district authorities will soon embark on a rigorous exercise. While many citizens are still scared of financial institutions, the planed two-year Financial Literacy Campaign will help change their. Gatete noted that the country cannot possibly achieve its GDP growth target of 7 to 8 percent with a population that is financially excluded and illiterate. “The speed at which the country’s economy is growing requires high investment capital.” As such, the financial literacy campaigns will aim to encourage home grown savings which will aid in investment thus relieving the country of overdependence on foreign capital investment. It is hoped that a combination of all the strategies will greatly impact the financial sector landscape in Rwanda and help achieve the 80 percent access to finance target by 2017. The author is Manager, Public Relations and Communications at the National Bank of Rwanda. Contact: wkatete@bnr.rw

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New strategies to boost financial inclusion