In the case of the financial inclusion rate, Rwanda is going through a strong phase as it is in a higher place with 72%. The National Bank of the country is one of the main enablers of financial inclusion programs. Financial inclusion as a term is looked at thoroughly in the country’s overall programs as it can be a crucial tool for them to initiate development and mitigate poverty issues.
The Governor of the National Bank of Rwanda has recently highlighted the fact that the country has seen more than a 24% rise in its financial inclusion rate within just four years. This clearly shows the healthy distribution of financial services and their accessibility, as seen in both the cases of formal and informal providers.
With this kind of rise in financial accessibility and inclusion, the country is now looking forward to reaching the figure of more than 90% financial accessibility by 2020. The World Bank has supported this goal of the country with the initiation of a program worth 2.25 million. This was launched to provide support to the financial inclusion sections of the country.
The overall role of the National Bank of Rwanda is to team up with other kinds of stakeholders for the initiation of policies and strategies so that the country can advance more in the field of financial inclusion. NBR constantly conducts surveys and collects data from all the financial institutions in the country, as it is important for them to come up with reports of financial inclusion.
What is the Current Condition of Financial Inclusion in Rwanda?
Rwanda has seen a major increase in the numbers of the financial inclusion rate as the contribution of the National Bank of Rwanda, in this case, is huge. By teaming up with the World Bank and the AFI (Alliance for Financial Inclusion), they have hosted a major conference event named Financial Inclusion for Inclusive Growth and Sustainable Development.
During the event, the Governor of the National Bank of Rwanda summarized the overall rise in financial accessibility as it has increased to 72% from 48% within just four years. The country now has a major goal to increase this rate by more than 90% by the year 2020. In some other context, g2p and gender when will Pakistani women be able to withdraw their own money?
In a similar case, the World Bank has provided all the support by initiating a program that can support the areas of financial inclusion in Rwanda. The overall price estimation of this program was worth 2.25 million. Apart from this, there are also other areas that were positively impacted by this increase in financial inclusion.
- On the basis of the FinScope Survey in 2012, there was a decrease in exclusion rates as it dropped to 28% from 52% within four years.
- Apart from this, there was a rapid increase in formal services and their accessibility as it went up to 42% from 21% within the same four years.
- The new goal of the country is to reach up to 90% of formal service access by the year 2020.
- The overall growth in formal service access in Rwanda was mainly contributed by the bank and non-bank services within the country.
- In this regard, all kinds of baking services also increased in numbers within the country as it went up to 14.
Now in case you are wondering what the major source that primarily affected this kind of growth service access within Rwanda is that it has seen a lot of increase in banking and insurance companies as well as microfinance companies.
Sources That Have Attributed to Rwanda’s Growth in Service Access
In the context of the growth in formal services within the country of Rwanda, it can be directed to the banking and non-banking services and other kinds of services as well. In case you are wondering, digital credit in Africa, are nano loans safe for consumers? Well, in this case, the emergence of more MFIs and insurance companies has also played a crucial part in the growth of formal service access in Rwanda.
1. Resurgence of Banking Services
The main contributors to Rwanda’s growth in formal services can be attributed to all the banking as well as non-banking services. The increase in the number of banks is one of the major sources that has majorly contributed to the growth of the country’s formal services. Within a space of three years, Rwanda’s banks have increased by more than 14 as beforehand it was under 10.
2. Emergence of Umurenge SACCOs
In terms of other sources that have helped in the growth of Rwanda’s formal service access are the credit cooperatives. It is especially true in the case of Umurenge SACCOs as it has attracted newer customers. Within just three years, they have taken over more than 1.6 million customers as this is also one of the main resources of Rwanda that has tremendously helped in the context of its formal services accessibility.
3. Increase in the Number of Microfinance Institutions
The emergence of credit cooperatives has also made sure that more than 90% of the population stays close to these organizations. The overall increase in the number of microfinance institutions is also one of the main sources that are helping in the case of the growth of formal service accessibility within the country of Rwanda.
Several microfinance institutions like Umurenge SACCOs have grown in numbers as it has crossing more than 491 by the year 2013. In just three years, the whole condition of the microfinance institutions has risen as it was just 125 in the year 2008.
4. Insurance Companies
Apart from microfinance institutions and banking services, the overall situation of insurance companies and pension providers has also improved tremendously in the last three years. Within the context of Rwanda, the insurance companies have seen growth as well as the number went up to 13 as it was just 9 three years ago. The increase in the number of pension providers is also one of the main sources of the country through which was able to grow its formal services as it went up to 56 from the earlier years of 41.
All of these sources have helped the country of Rwanda not only in its increase in formal service accessibility but also in decreasing the rate of exclusion within the overall population. With the help of these services, the country is now looking forward to increasing its percentage rate of formal service access by more than 72%, as its main goal is to reach more than 90% by the end of 2020. In terms of all the sources that have helped in the growth of formal services within Rwanda, there is also technological assistance which has played a crucial role.
The Overall Role of Technology in the Reduction of Exclusion Rates in Rwanda
During the conference with the World Bank, the National Bank of Rwanda has already pinpointed the overall contribution of technology in the decreasing of the numbers of exclusion rates not only in Rwanda but also in different parts of East Africa.
There is a strong connection between technological advancement, innovation, and financial inclusion, as is clearly evident through the case of Rwanda and its current emergence of providing formal services to more than 72% of its population. This proves how innovation happens in the financial inclusion movement and elsewhere.
The Contribution of Technology-based Service Model
During the conference, the National Bank of Rwanda has already provided the fact that the technology-based service model has helped curb the overall exclusion rates within the country of Rwanda. These latest tech-enabled services, within just a few years, were able to cut down the exclusion rate of the country by more than half.
The overall role of technology in financial inclusion was proven right through this evidence as it not only helped in the context of a country like Rwanda but also in the case of other East African countries. Thus technological innovation can easily be correlated with financial inclusion within any part of the world.
Increase in the Space of Mobile Money Remittances
In the case of both countries like Rwanda as well as Tanzania, they are mainly focussing on the interoperability within mobile money providers. What does Mobile money transfer mean for financial inclusion? It is done to allow for more mobile money remittances as it can be used for any kind of cross-border payment service.
The prioritization of mobile money space within these two countries has made them more adaptable in terms of cutting down the exclusion rate as well as increasing the financial inclusion rate. Technology here has served its case for more financial inclusion as it has tremendously helped in the case of a country like Rwanda. Thus it has played a crucial role in curbing the exclusion rates in a country like Rwanda, where people are seeing its benefits in multiple ways.
Establishment of AMPI
In the context of Rwanda, the country’s central banks have formed a strong partnership with the AMPI (African Mobile Phone Financial Services Policy Initiative) and other AFI institutions. This kind of teamwork has done great for the purpose of knowledge sharing, as it is crucial for the policy-making of mobile money services. In terms of gathering more knowledge of the policies of this mobile money policies and frameworks, this kind of platform is essential for all people.
Financial inclusion overall, as a term, can be crucial for initiating an equitable society as it also can give a positive makeover to the entire economy. However, in the context of any developing part of the world, initiating financial inclusion can be a huge challenge. This is where the latest technological advancements can enhance the overall accessibility to financial services.
In the case of Rwanda, it is even more evident as the accessibility of cross-border mobile money remittances has helped in the cause of reducing the exclusion rates by more than half of its population rate. In terms of other financial services, microfinance institutions and fintech ecosystems can also help in the cause of financial inclusion of any country.
Now that we have decoded the role of technological advancements and their overall role in the reduction of exclusion rates, let’s have a look at the basic features of the newly launched program, the Financial Inclusion Support Framework.
Support Provided By Financial Inclusion Support Framework
In addition to providing the full report of Rwanda’s growth in formal services and the major factors that resulted in it, the World Bank also launched a support program which can be termed as FISF (Financial Inclusion Support Framework) Programme. The overall goal of this program was to help in the cause of financial inclusion for the whole country. There are various areas which are targetted by this program overall as these are.
- The FISF program was generally initiated for the increase in the financial inclusion rate of Rwanda.
- The other area in this program that will provide financial support is the Micro, Small, and Medium Enterprises of the country.
- Client protection is also another part where FISF as a program is prioritized.
- For financial inclusion and financial literacy among the low-income, the population is crucial as FISF as a program is supporting this section as well as the population of Rwanda. So that the country can increase its numbers in financial inclusion rate as its main goal is to reach more than 90% by the year 2020.
- Another key area that will be targeted by the FISF program is upgrading the payment systems of the remote areas of Rwanda. So that the low-income population can get proper access to formal services as it can increase the numbers in financial inclusion rate.
- Improving the overall financial infrastructure is also another major goal of the FISF program as the country is trying to reach out to the remote population of the country. So that the politics behind mobile money in Ethiopia does not happen here, without any proper financial infrastructure, no country can spread its services equally to remote sections of the population.
- The other aim of the FISF program is to team up with different inclusion stakeholders in the country so that service access can be enhanced in all parts of society. What happens if the blockchain breaks? Through this process, the overall quality of the formal services can also be improved so that they can be delivered in an equal way to all the remote sections of the population.
The overall success of the FISF program is pretty much dependent on technical assistance as well as infrastructure development. The role of the advisory services, along with the proper policy building and regulations, is also crucial in case the country wants to achieve more than 90% of the formal accessibility of services.
Frequently Asked Questions
Q1. What is the status of financial inclusion in Rwanda?
Rwanda has placed itself as one of the most financially included countries in the world. In the current year, the country has reported that more than 93% of its population is financially included. On the basis of the Finscope Survey that was conducted in 2020, the country has managed to cross the line of 90% financial inclusion rate as their main mission was to reach there.
Q2. What is PFM in Rwanda?
PFM is the acronym for Public Finance Management in Rwanda, as it is a kind of framework. Through this, the country can put all the resources of the states and allocate them for usage. The main vision of the PFM strategy for Rwanda is to make the country a mid-income economy by the year 2030.
Q3. What is the payment system in Rwanda?
In the context of Rwanda, it has its National Payment System, which has seen a lot of transformation over the years, with the initiation of other kinds of services like Rwanda Integrated Payments Processing System and other kinds of card-regulated payment services. In addition to these, there are also Point Of Sale, ATMs, and mobile-based payment services.
Rwanda as a country has seen a lot of rise in financial inclusion rate as it was recently presented in a recent event named Financial Inclusion for Inclusive Growth and Sustainable Development. The Governor has discussed the rise in the number of formal access levels as it went up to 72% within just four years. The country is now looking forward to increasing this number even more as its main goal is to reach more than 90% of formal services access levels so that all the remote population can get their required services.
- Jonas Taylor is a financial expert and experienced writer with a focus on finance news, accounting software, and related topics. He has a talent for explaining complex financial concepts in an accessible way and has published high-quality content in various publications. He is dedicated to delivering valuable information to readers, staying up-to-date with financial news and trends, and sharing his expertise with others.