Africa: Rwanda's Financial Inclusion Story is Impressive, Challenging

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Oct 2016
Rwanda , October, 24 2016 - According to the recently concluded FINSCOPE 2016 survey, 89 per cent of the Rwandan population has access to financial services delivered through both formal and informal financial institutions. The government has set a 100 per cent financial inclusion target by 2020.

More than 300 global financial inclusion experts have been meeting in Rwanda's capital Kigali to share experiences on how to drive financial inclusion to the more than two billion people that are still excluded globally. The story of Rwanda at this conference came through as not only impressive but one that took many of us by surprise. According to the recently concluded FINSCOPE 2016 survey, 89 per cent of the Rwandan population has access to financial services delivered through both formal and informal financial institutions. The government has set a 100 per cent financial inclusion target by 2020. This ambitious but achievable target is premised on the government's recognition that access to financial services is a pre-requisite for inclusive growth. So what has Rwanda done differently?

Firstly, the government embarked on developing its rural financial services infrastructure to provide a vehicle that would deliver financial services to the base of the pyramid. Cooperative savings and credit organisations popularly known as Umurengye have been established in each administrative unit across the country to provide a secure and safe place for the poor to save and borrow. The government has since set up the Rwanda Cooperative Agency - a government entity mandated with the regulation and oversight of the Sacco activities. With this regulation, the activities of Saccos are checked providing confidence and trust among the users. This has been key in driving uptake and usage of financial services. In fact, the 2016 FINSCOPE findings indicate that the one Sacco per administrative unit has been key in driving financial inclusion.

Secondly, Rwanda set up a payment switch - RSwitch which has also become the first switch in East and Central Africa to attain interoperability.

In October last year, Switch introduced EHuriro - an interoperable financial platform developed to facilitate integration between all financial institutions, including banks, mobile money operators (MNOs), micro finance institutions and Saccoss, to enable individuals access their e-money using their cards, mobile phones, ATMs or online applications. RSwitch's eHuriro has connected two local MNOs, a commercial bank and more than 20 MFIs who can now send money from either of their mobile wallets directly into the other. The RSwitch and its interoperable capability has and continues to open up huge opportunities for seamless partnerships among financial sector players as a catalyst for financial inclusion.

Several global research studies have shown that bank accounts as well mobile wallets remain empty despite the fact that the number of people signing up for mobile wallets as well as bank accounts has increased. Financial inclusion is only complete when people opt-in but also continue to consistently use the products and services offered by the financial service providers.

To tackle this challenge, Rwanda designed a financial education strategy to build the capability of Rwandans on the fundamentals of financial services as a pre-requisite for improving knowledge of personal finance, but also transforming this knowledge into action. Financial education has been incorporated in the curriculum throughout the education system and provides tools for sound money management practices on earning, spending, saving, borrowing and investing.

The Rwandan government has been hailed for exceptional public service performance. The governor of the central bank informed us that mayors and leaders at different levels have a Key Performance Indicator on financial inclusion that they must deliver as part of their overall performance management contracts. By elevating the importance of financial inclusion as an integral part of social and economic development, the leadership structure at the local level is compelled to support efforts that promote financial inclusion within their eco-system.

My key take-away from Rwanda's financial inclusion story is that leadership makes the difference.



Source : All Africa
 

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