Govt banks on community processing centers to boost SMEs

Govt banks on community processing centers to boost SMEs

  In a bid to  increase  local production and  address challenges  the Small and Medium enterprises-SME cluster is  facing, the  government  is  has started  community  processing Centers-CPCs. The Minister of trade and Industry Francois Kanimba said that the processing centers will increase   SME contribution to the national economic development in line with government programs. “The ministry    initiated the CPC concept in 2012 as a mechanism to address the challenges SMEs are facing and boost local production capacity for recapturing local, regional and international market,” he said The   processing   center are seen by  government as  role  model   centers to help boost the creation of more  SME  in   processing cluster  to   boost  production  needed to   increase   exports…

Shareholders in banks struggling to make profits

Shareholders in banks struggling to make profits

Despite being an impressive leap and a show of how sound Rwanda’s financial sector is, banks are still facing low profitability, a turn-off for banks that may want to enter the market in the future. Banks’ return on average equity (ROAE), a measure of their profitability for the first nine months of last year stood at 10.9 percent, according to National Bank of Rwanda’s (BNR) last month monetary policy statement. This is lower compared to banks in neighboring East African Community countries, Kenya, Uganda and Tanzania which have their ROAE at above 25 percent. Lawson Naibo, chief operating officer of Bank of Kigali (BK) attributes the low profitability in the market to continued “pressure” on…

Microfinance sector needs to boost performance – Experts

Microfinance sector needs to boost performance - Experts

Financial experts say detailed information on loan products will ease the hiked percentages, following the central bank announcement that the microfinance sector’s non-performing loans rose to 7.7 percent in the third quarter of the 2014 from 6.8 percent. The increase   in   Non-Performing Loans-NPLs which h ate in  profit margins of the sector, according to Central Bank  is likelyto affect the positive performance    of the sector  looked on  to  boost financial inclusion for all mainly  rural folks. Accordingly, the sector clients  which   most of them  have  little or  no background  in education  take  loans without  first understanding  their  conditions, thus  end up  failing to  pay back, something that would  be  increasing  NPLs. “because most  people are…

Microfinance institutions urged to incorporate regional charters

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Regional microfinance institutions are poised to benefit from regional integration, if they apply for an observer status at the East African community secretariat. Innocent Safari, the permanent secretary, Ministry of East Africa community affairs has said. The advice follows plans by sector players to move towards integrating legal and regulatory frameworks during last year’s C.E.O’s summit in the country. During the summit, top micro finance managers resolved to explore ways in which laws, regulations and supervisory frameworks governing the sector can be harmonised to enhance cross-border business. However, according to Safari, there is need for the sector through their East Africa Microfinance Institutions Network (EAMIN) to apply for an observer status at the EAC secretariat…

Banks cry foul in 2014, hope for better 2015

Banks cry foul in 2014, hope for better 2015

The banking industry is struggling to register profits despite heavy investment that the players have injected into their operations over the years. Over the past nine months, Kenya Commercial Bank set aside Rwf1.2 billion to cater for bad loans and injected Rwf1.1 billion as additional capital. However, the bank has registered a staggering Rwf4 billion loss. Equity Bank in 2013/2014 financial year capitalised its operations to the tune of Rwf5 billion and set aside Rwf306 million for bad loans. However, the bank registered a loss of Rwf2.2 billion. GT Bank, a Nigerian bank, which recently acquired Fina Bank, also registered a loss of up Rwf821 million this year. “Most banks are considering or have already…

Microfinance banks would foster access to credit for SMEs

Microfinance banks would foster access to credit for SMEs

Financial Institutions like Microfinance Banks are seen as vital channel through which   Small and Medium enterprises-(SMEs) mainly in rural areas can access credit to expand their businesses. Due to their nature of operation, rural SMEs which  are  mostly  household  enterprises  depending  on   meager family  capital have been finding it difficult to   woe banks to extend credit to them with the latter seeing the country’s budding sector  as risky  to lend to. While on the other hand microfinance Institutions may not have enough line of credit to   lend to the entire sector which as well as enough resources to   ensure   loan recovery as well as supporting the borrower technically to avoid defaulting. “Their service delivery   is  …

Financial constraints cripple Umwalimu Saccos loan book growth

Financial constraints cripple Umwalimu Saccos loan book growth

Despite   registering a huge profit    last year mainly  driven  by   increased loan  book as well as  dropping  Non  performing loans-NPLs,  Umwalimu  Sacco  says  lack of financial  capacity  is   hampering the growth   in its loan  book . To extend to   its clients, the country’s teachers Savings and credit cooperatives relies on the returns from the loans disbursed as well as teachers’ savings which is not enough to   satisfy the increasing demand. “The financial capacity of the institution is still   low, specifically in covering or supporting the teachers’ loan demands,” said Joseph   Museruka, the Sacco’s Managing Director This according to Museruka   is also attributed to  low interest rate that  stands  at 11 per cent which   drive   more …

Non- performing loans affecting banking sector

Non- performing loans affecting banking sector

  The banking industry is considering a recapitalisation to shore up its profitability levels, which are rattled by high operating costs and non-performing loans. The industry is struggling to register profits despite increased spending on operations over the past couple of years in addition to attracting high levels of investment. Some lenders including Kenya Commercial Bank (KCB), Equity Bank and GTbank have been forced to make loan loss provisions to cater for the loans written off their balance sheets. “Most banks are considering or have already added more capital into their operations as profits are being weighed down by high non-performing loans and high operation costs,” said Maurice Toroitich, managing director of KCB Rwanda. On…

SACCOs urged to integrate ICT, boost efficiency

SACCO

  Despite the recent growth in the performance   sheet of the savings and Credit Cooperatives –SACCOs, there is a need to integrate technology to help increase efficiency in serving their clientele. The SACCOS are seen as vital tools to drive financial inclusion especially banking the unbanked in rural areas, something that has promoted government to put   in much efforts   to boost their capacity. Accordingto Fin scopeSurvey 2013, “Use of technology    in the SACCOS is important and this will solve some of the challenges like Non Performing Loans,” said Damien Mugabo, Director General, Rwanda Cooperative Agency-RCA Mugabo says that with the recent linking of the Sacco’s to the credit Reference bureau has played a key role…

KCB to offer more mortgages

KCB to offer more mortgages

Kenya’s Commercial Bank, the largest lender by assets, plans to offer mortgage-backed securities on the local bourse to help developers raise funds to build new housing units, its chief executive said. There are less than 30,000 mortgages in Rwanda against a potential of 1 million, according to the government, and a severe shortage of houses has driven up prices. KCB, which also operates in Tanzania, Uganda, South Sudan and Burundi, has previously said it has a target of writing 1 million new mortgages, in a country where annual demand for housing outstrips supply by about 100,000 units. The bank, one of the biggest mortgage lenders in Kenya along with Housing Finance, said it was working with…