PROCESS OF ESTABLISHING A FINANCIAL INCLUSION PROGRAM IN RWANDA<br />Kantengwa Angelique <br />Senior Director Financial S...
Rwanda’s Finance Industry Landscape<br /><ul><li>Rwanda’s financial sector is relatively small
It comprises :
8 Commercial banks
3 Specialized banks (BHR, BRD, CDHR)
1 Microfinance bank
122 Microfinance institutions
8 Insurance companies
1 Public Pension fund (NSSR)
40 Growing Private Pension funds
2 venture capital companies (GROFIN, REIC)</li></ul>2<br />RWANDA FINANCIAL SECTOR STRUCTURE<br />The Micro credit summit ...
2005 WB/IMF Financial sector assessment identified challenges facing Rwanda financial sector; <br /><ul><li>Lack of financ...
Very low insurance penetration
Scarcity of long term debt and a low savings rate
Unregulated pension and Insurance sector
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AMERMS Workshop 25. Designing and Implementing a National Strategy for Financial Inclusion (PPT by Angelique Kantengwa)

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FULL TITLE:
Process of Designing and Implementing a National Strategy for Financial Inclusion: Challenges and Lessons Learned
ROOM: Aberdare Hall
Translated session: English & French
PANEL:
Chair: Mr. Makarimi Adechoubou, Head of the Regional Office for Southern and East Africa, Inclusive Finance Senior Technical Advisor, United Nations Capital Development Fund (UNCDF), South Africa
Panelist: Ms. Angelique Kantengwa, Senior Director Financial Stability, National Bank of Rwanda, Rwanda
Panelist: Mr. Tafsir Amadou Mbaye, National Director Microfinance, Microfinance Direction Ministry, Senegal
Panelist: Dr. Fodé Ndiaye, Head of the Regional Office West and Central Africa, Inclusive Finance Senior Technical Advisor, United Nations Capital Development Fund (UNCDF), Senegal

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AMERMS Workshop 25. Designing and Implementing a National Strategy for Financial Inclusion (PPT by Angelique Kantengwa)

  1. 1. PROCESS OF ESTABLISHING A FINANCIAL INCLUSION PROGRAM IN RWANDA<br />Kantengwa Angelique <br />Senior Director Financial Stability<br />National Bank of Rwanda<br />1<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  2. 2. Rwanda’s Finance Industry Landscape<br /><ul><li>Rwanda’s financial sector is relatively small
  3. 3. It comprises :
  4. 4. 8 Commercial banks
  5. 5. 3 Specialized banks (BHR, BRD, CDHR)
  6. 6. 1 Microfinance bank
  7. 7. 122 Microfinance institutions
  8. 8. 8 Insurance companies
  9. 9. 1 Public Pension fund (NSSR)
  10. 10. 40 Growing Private Pension funds
  11. 11. 2 venture capital companies (GROFIN, REIC)</li></ul>2<br />RWANDA FINANCIAL SECTOR STRUCTURE<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  12. 12. 2005 WB/IMF Financial sector assessment identified challenges facing Rwanda financial sector; <br /><ul><li>Lack of financial depth, undiversified & Oligopolistic banking sector
  13. 13. Very low insurance penetration
  14. 14. Scarcity of long term debt and a low savings rate
  15. 15. Unregulated pension and Insurance sector
  16. 16. Scarcity of home mortgages and capital equity
  17. 17. Inadequate payment system
  18. 18. FSAP made recommendations to address these weaknesses
  19. 19. Government of Rwanda launched the FSDP as a comprehensive reform agenda</li></ul>3<br />ASSESSMENT OF THE SITUATION IN RWANDA (FSAP 2005 and Finscope 2008)<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  20. 20. Financial Access, Percent of Adult Population. <br />4<br /> BANKING AND ACCESS TO CREDITAccess indicators (Source: FinScope Rwanda 2008) <br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  21. 21. The figure places the Rwandan “access strand” in a regional comparison with other African countries for which similar FinScope surveys have been undertaken<br />5<br />ACCESS INDICATORS (continued) Source: FinScope Rwanda 2008<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  22. 22. “To build an inclusive financial system, capable of meeting the financing needs of a rapidly growing economy and a key driver to attain Rwanda’s vision of being a middle- income country and an economic trade and communication hub by 2020”.<br />KEY ANCHORS TO THE FSDP<br /><ul><li>Macroeconomic stability
  23. 23. Banking and access to credit
  24. 24. Long term finance and capital markets
  25. 25. Contractual savings regulation (pension and insurance)
  26. 26. Payments systems modernization</li></ul>6<br />RWANDA FSDP MISSION STATEMENT<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  27. 27. Expansion of banks branch networks particularly in rural areas<br />Promotion of microfinance institution and building rural cooperative structures<br />Domestic savings mobilization- expanding access to formal financial services to the population<br />Payment system modernization-mobile banking, agent banking,…<br />Establish programs of financial literacy<br />7<br />FINANCIAL INCLUSION- HOW TO?<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  28. 28. Government: creating a favourable environment without being a provider:; fiscal incentives; promoting financial literacy and financial culture; <br />Central Bank :designing the strategy without being a promoter. legal and regulatory framework. BNR support the strategy by proposing laws encouraging the promotion of financial inclusion and encouraging viable and sustainable financial institutions. <br />Financial institutions including MFIs: clients oriented businesses; <br />Investors and donors: to invest in activities which promote financial inclusion and to support the strategy by participating on the roundtable; <br />Beneficiaries: awareness of the role of savings; repayment of loans; bankable projects; <br />8<br />INSTITUTIONAL FRAMEWORK<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  29. 29. At macro level: Rwanda has put in place an adapted legal and regulatory framework; The Government has adopted a microfinance policy to facilitate broader and deeper access to financial services.<br />At meso level : Gvt mobilise funding via the donor community (UNCDF, DFID,..) and its own budget to improve financial market infrastructure and support services to provide more effective pro-rural, poor and MSMEs financial services in the country<br />At micro level : AMIR is giving support (training, TA,…) to financial institutions retail capacity to offer financial services tailored to the needs and preferences of their clients<br /> BNR support the promotion of strategic alliances between traditional financial institutions and MFIs<br />9<br />MOBILIZING RESOURCES <br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  30. 30. KEY CHALLENGES<br /><ul><li>Very low access level to financial services
  31. 31. Resource mismatch to finance increasing demand for investment
  32. 32. High interest rate spread (8.5%)
  33. 33. Low access to finance by SMEs
  34. 34. Low lending to agriculture sector (4.5%) </li></ul>STRATEGIES<br /><ul><li>Overcoming access problems
  35. 35. Domestic Savings Mobilization
  36. 36. External resource Mobilization
  37. 37. Facilitate access to finance by SMEs
  38. 38. Unlocking lending to agriculture
  39. 39. Reduce the interest rate spread through the reduction of the financial risk premium overtime</li></ul>10<br />BANKING AND ACCESS TO CREDIT <br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  40. 40. KEY CHALLENGES<br /><ul><li>Supervision of a large mass of growing MFIs
  41. 41. Reimbursement of depositors in failed MFIs is limited due to low recovery rate
  42. 42. Low operational skills
  43. 43. Inadequate legal systems to address MFIs problems
  44. 44. The financial viability of large number of existing MFIs remains an issue</li></ul>STRATEGIES<br /><ul><li>Strengthen monitoring for MFI’s staff capacity building and improvement in MIS
  45. 45. Improve the governance of MFIs
  46. 46. Consolidation of small MFIs to reach the minimum size for financial viability
  47. 47. Making operational the National Microfinance Consultative Committee (NMCC) to coordinate the industry development </li></ul>11<br />FINANCIAL INCLUSION AND ACCESS TO CREDIT -MICROFINANCE<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  48. 48. KEY CHALLENGES<br /><ul><li>Low insurance up-take on the demand side
  49. 49. Limited penetration of insurers to untapped markets
  50. 50. Limited professionalism- on the supply side
  51. 51. Limited database on historical performance of the sector</li></ul>STRATEGIES<br /><ul><li>Increase & diversification of insurance products such that by 2020 the penetration % of GDP for:</li></ul> - Non- life premiums to be 2.5% of GDP (2008:1.20%)<br /> - Life insurance is 7.5% of GDP( 2008: 0.5%)<br /> - Total penetration to be 10% (2009: 1.8%)<br /><ul><li>Improve professionalism through education and trainings
  52. 52. Draft insurance contract law and mandatory insurance law</li></ul>12<br />INSURANCE SECTOR<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  53. 53. KEY CHALLENGES<br /><ul><li>Big size of excluded informal sector
  54. 54. Low knowledge of pension services in the Rwandan Society</li></ul>STRATEGIES<br /><ul><li>Increase coverage from 5.6% in 2007 to 25% by 2020 (contribution/active labor force) through:
  55. 55. Extension of current schemes to self employed people
  56. 56. The introduction of personal retirement savings account
  57. 57. Reform the current social security scheme to secure its long term financial viability
  58. 58. Establish a provident fund
  59. 59. Set tax incentives to encourage the development of private pension schemes.</li></ul>13<br />CONTRACTUAL SAVINGS -PENSION SECTOR <br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  60. 60. Vision = Changing the Rwandan society from cash-based oriented to one using modern means of cash-less payments by encouraging the usage of non-cash payment instruments. <br />KEY CHALLENGES<br />Setting modern payment system is very costly and Banks are reluctant to invest<br />Connectivity and reliability of the network<br />A pricing structure with very high prices<br />In general shifting from cash and paper takes awhile amongst the population <br />STRATEGIES<br />Developing a Card based Payment system<br />A strong awareness campaign<br />Implementation of the RIPPS (March 2010 to March 2011)<br />14<br />PAYMENT SYSTEMS<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
  61. 61. Thankyou for your attention<br />Questions?<br />15<br />The Micro credit summit -Nairobi 7th to 10th April 2010<br />
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