Commerce, hospitality sector most financed sectors

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The commerce, restaurants and hotels were the most financed sectors in terms of access to credit by private sector from commercial banks in 2014. According to Central bank statistics, out of the total new authorized loans form commercial banks, commerce, restaurants and hotels took 41.6% of the total loans, a proportion that indicates the growth within the services sector. This saw total loans disbursed to private sector increasing by 38.2 percent to Rwf 652.9 billion in 2014 from Rwf 472.5 billion in the same period in 2013. “There is an improvement on the side of Banks on financing businesses mainly in these areas and we will as Central Bank continue to support banks to extend…

Bad loans now threaten microfinance sector

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The rapid growth of savings and credit co-operative societies without matching capacity to manage loans is partly responsible for the increasing bad loans. Latest statists from to national bank of Rwanda registered an increase its bad   loans from 6.8 percent recorded in 2013 to 7 percent by end of December 2014. “The capacity of loan officers to analyze loan applications and also ensure the monitoring after disbursement is still low,” Jessica Massi, a financial consultant said. Moreover, the lack of knowledge on the side of borrowers also contributes yet another threat to reducing bad loans. “We are carrying out a scientific research on the causes of bad loans which is becoming a prime threat to…

Banking sector buoyant as net profit rise by 54 percent

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The banking sector remained   profitable in 2014 recording a net profit increasing by 54.3%, a positive outlook that   provides optimism for a better performance this year. The sector  that  dominates the   financial sector  is looked at to   boost  access to credit  by  private sector to  drive  economic growth needed to  push the  country  to  middle income   by 2020. Central Bank  statistics indicate that  the  sector’s  net profit  after tax for the industry rose to Rwf34.94 billion December 2014    up from   rwf22.64 billion  in the same period in 2013 while its Return on assets  (ROA) and return on equity (ROE) stood at 1.9% and 10.8% respectively. “From stability and robustness perspective, the sector is sound and…

Nyabihu: Rural banks urged to priorities loans to farmers

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Angela Mukaminani, the vice mayor for finance and economic development of Nyabihu district has called on rural banks to give priority to farmers in their loan allocations to assist small farmers acquire loans to invest in agriculture. She made the appeal on Feb, 17, in a meeting with farmers and financial institutions that operate in the district. She required banks and related financial institutions to grant more loans to agriculture-related sectors, saying the current credit supply for the countryside remains insufficient and that it is hard for farmers to access bank loans. She indicated that majority of farmers were located in the rural areas where rural banks operated, and as such there was the need…

Borrowers contributing to high interest rates – Experts

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The banking sector has been pinned by the public for its high rates that make it difficult for eligible borrowers to access credit thus crippling the increase of flow of credit to the private sector. According to John Rwangombwa, Governor of the National Bank of Rwanda says that most borrowers cannot bargain for lower rates when they approach banks for a credit something that   contributed to laxity   by banks to bring down the rates. “The culture of borrowers not bargaining with banks have contributed to inefficiencies observed in the banking sector as indicated by high interest rate spread,” Rwangombwa said Moreover, other   borrowers are not aware of the conditions attached to the loans they  are…

Rwanda’s trade Deficit continues to widen

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  The country’s  trade deficit  continued to worsen  in  2014  widening by  7.5 percent, despite a  positive outlook  the economy  registered in the  same  period under review, the Central Bank   has  indicated. The bank  through  its monetary policy and financial stability  statement  for February  2015, showed  the deficit expanding   to USD 1,799.54 million by end of December    last year up from 1,674.38 million 2013 driven by   increased import receipts. Accordingly, formal imports value increased to USD 2,399.3 million representing   6.8% while  volumes   increased by  3.7%, mainly driven by   consumer goods (+4.9%), while  energy and lubricants (+3.4%),   capital goods increased  by 3.0%, while  intermediary goods recorded (+2.9%). The  Central bank says that the  rise in import…

Pan-African banks are improving competition – IMF

The IMF Director General meeting President Paul Kagame on her recent visit to Rwanda

With  their  presence in around  36 countries and Rwanda  inclusive , the pan African Banks  have triggered access to  higher skills and expertise, access to capital especially for continental  trade projects as well as  diversification of resources. For example, the emergence of eco bank   in Rwanda   increasing innovation and use of technologies in the country’s financial sector such as continental electronic payments systems, upgrade of the local payment systems something that triggers a cash lite economy. “These banks are driving innovation, enhancing financial inclusion, and in some cases have contributed to lower costs,” a report by IMF stated A renewed impetus for regional integration, coupled with the success of mobile payments in Kenya was propitious…

Cooperative bank needs Rwf 5bn to start

Francois Kanimba

The proposed cooperative bank   requires an initial deposit of Rwf 5 billion for its establishment, the Minister of Trade and Industry Francois Kanimba said. The Minister said that   the    bank, once established will provide a financial backbone to savings and credit cooperatives, which have been instrumental   in rural financial inclusion. Cooperatives are instrumental in providing opportunities for productive employment, as well as offering health care, education, potable water, improved sanitation, roads, and market access, while giving a stronger “voice” to rural groups. “Under the arrangement, Umurenge Saccos will raise 60 per cent of the capital, while the remaining 40 per cent will be provided by the strategic investor,” Kanimba said. “Therefore, the challenge is to…

Banks urged to consider Agriculture as ‘CRUCIAL’

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Financial institutions in Rwanda have maintained their position saying the agriculture sector is ‘insecure’ to invest in. The central banks says of the total lending portfolio from commercial banks, only 5% goes to agriculture. On February 3, farmers met the financiers during an agricultural forum that was organized by civil society platform. During the meeting, farmers were optimistic something positive would come out. Yet, financiers wanted to prove to farmers that the ball was in their hand. Ephraim Turahirwa, the CEO of Banque Populaire du Rwanda, largest financier of agribusiness, with over 190 branches, said, “we cannot lend anyone until we find our money will be returned, with interests.” Farmers then turned to the Development…

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…