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

1. PROCESS OF ESTABLISHING A FINANCIAL INCLUSION PROGRAM IN RWANDA Kantengwa Angelique Senior Director Financial Stability National Bank of Rwanda 1 The Micro credit summit -Nairobi 7th to 10th April 2010

3. It comprises :

4. 8 Commercial banks

5. 3 Specialized banks (BHR, BRD, CDHR)

6. 1 Microfinance bank

7. 122 Microfinance institutions

8. 8 Insurance companies

9. 1 Public Pension fund (NSSR)

10. 40 Growing Private Pension funds

11. 2 venture capital companies (GROFIN, REIC)2 RWANDA FINANCIAL SECTOR STRUCTURE The Micro credit summit -Nairobi 7th to 10th April 2010

13. Very low insurance penetration

14. Scarcity of long term debt and a low savings rate

15. Unregulated pension and Insurance sector

16. Scarcity of home mortgages and capital equity

17. Inadequate payment system

18. FSAP made recommendations to address these weaknesses

19. Government of Rwanda launched the FSDP as a comprehensive reform agenda3 ASSESSMENT OF THE SITUATION IN RWANDA (FSAP 2005 and Finscope 2008) The Micro credit summit -Nairobi 7th to 10th April 2010

20. Financial Access, Percent of Adult Population. 4 BANKING AND ACCESS TO CREDITAccess indicators (Source: FinScope Rwanda 2008) The Micro credit summit -Nairobi 7th to 10th April 2010

21. The figure places the Rwandan “access strand” in a regional comparison with other African countries for which similar FinScope surveys have been undertaken 5 ACCESS INDICATORS (continued) Source: FinScope Rwanda 2008 The Micro credit summit -Nairobi 7th to 10th April 2010

23. Banking and access to credit

24. Long term finance and capital markets

25. Contractual savings regulation (pension and insurance)

26. Payments systems modernization6 RWANDA FSDP MISSION STATEMENT The Micro credit summit -Nairobi 7th to 10th April 2010

27. Expansion of banks branch networks particularly in rural areas Promotion of microfinance institution and building rural cooperative structures Domestic savings mobilization- expanding access to formal financial services to the population Payment system modernization-mobile banking, agent banking,… Establish programs of financial literacy 7 FINANCIAL INCLUSION- HOW TO? The Micro credit summit -Nairobi 7th to 10th April 2010

28. Government: creating a favourable environment without being a provider:; fiscal incentives; promoting financial literacy and financial culture; 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. Financial institutions including MFIs: clients oriented businesses; Investors and donors: to invest in activities which promote financial inclusion and to support the strategy by participating on the roundtable; Beneficiaries: awareness of the role of savings; repayment of loans; bankable projects; 8 INSTITUTIONAL FRAMEWORK The Micro credit summit -Nairobi 7th to 10th April 2010

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. 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 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 BNR support the promotion of strategic alliances between traditional financial institutions and MFIs 9 MOBILIZING RESOURCES The Micro credit summit -Nairobi 7th to 10th April 2010

31. Resource mismatch to finance increasing demand for investment

32. High interest rate spread (8.5%)

33. Low access to finance by SMEs

35. Domestic Savings Mobilization

36. External resource Mobilization

37. Facilitate access to finance by SMEs

38. Unlocking lending to agriculture

39. Reduce the interest rate spread through the reduction of the financial risk premium overtime10 BANKING AND ACCESS TO CREDIT The Micro credit summit -Nairobi 7th to 10th April 2010

41. Reimbursement of depositors in failed MFIs is limited due to low recovery rate

42. Low operational skills

43. Inadequate legal systems to address MFIs problems

45. Improve the governance of MFIs

46. Consolidation of small MFIs to reach the minimum size for financial viability

47. Making operational the National Microfinance Consultative Committee (NMCC) to coordinate the industry development 11 FINANCIAL INCLUSION AND ACCESS TO CREDIT -MICROFINANCE The Micro credit summit -Nairobi 7th to 10th April 2010

49. Limited penetration of insurers to untapped markets

50. Limited professionalism- on the supply side

52. Draft insurance contract law and mandatory insurance law12 INSURANCE SECTOR The Micro credit summit -Nairobi 7th to 10th April 2010

55. Extension of current schemes to self employed people

56. The introduction of personal retirement savings account

57. Reform the current social security scheme to secure its long term financial viability

58. Establish a provident fund

59. Set tax incentives to encourage the development of private pension schemes.13 CONTRACTUAL SAVINGS -PENSION SECTOR The Micro credit summit -Nairobi 7th to 10th April 2010

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. KEY CHALLENGES Setting modern payment system is very costly and Banks are reluctant to invest Connectivity and reliability of the network A pricing structure with very high prices In general shifting from cash and paper takes awhile amongst the population STRATEGIES Developing a Card based Payment system A strong awareness campaign Implementation of the RIPPS (March 2010 to March 2011) 14 PAYMENT SYSTEMS The Micro credit summit -Nairobi 7th to 10th April 2010

61. Thankyou for your attention Questions? 15 The Micro credit summit -Nairobi 7th to 10th April 2010