BCDI is among the
banks that were created after the war and therefore
did not suffer from non-performing loans accumulated
by some competitors after '94. Was this competitive
advantage the main reason for setting up in Rwanda
at the time or was it for the long-term growth potential
of the market?
When I was in the States, I wanted to start my own
bank. And 1995 was the right time as saw an opportunity
to start my own business in my own country. I also
had a regional vision because Rwanda is a small
market, so the only way to expand is to create something
with a regional vision where we will be able to
expand into Eastern and Southern Africa.
We have created the bank here and in the DRC although
because of the problems there the bank is facing
difficulties too. We are also operating in Mozambique
and we are looking at other countries like Zambia.
My goal is to operate a regional network.
The starting point was Kigali because I wanted to
come back home and do something for this country.
It has been successful so far.
How would you describe the growth rate of your
bank since its creation?
Well, it's grown tremendously. We started from zero
to 30 billion francs in less than seven years
in total assets. We started with a capital of one
million dollars and today we are hitting five million
dollars. So we have done well over five years. We
are building a head office with a few loans which
is a sign of confidence. We have lines of credit
committed to the new head office and the shareholders
have agreed to forego dividend until we finish the
building, which will be another increase in the
capital of the bank.
You are the main shareholder of this bank, but
who are the others?
There are eleven other private, Rwandan shareholders.
We are proud to say that the indigenous people can
come together to create a sophisticated business.
This defies the mentality that Africans cannot get
into more sophisticated businesses.
In terms of technology, we produce local debit cards,
which are working. Our payment system is one of
the best on a real time network basis. We use imaging
as well, so you can see your picture while you deposit.
We have the latest technology in terms of banking.
When did you start focusing of innovative banking?
I am a banker; I haven't done anything else in my
life but banking. I knew that when you come to the
East African market, the best thing to do is to
prove the quality of service to the clients.
I went for the foreign medium enterprise company
when I started. I took the view a big bank would
take and I made the clients feel important. So then
the bank realised growth because we made them feel
at home, we introduced them to private banking,
first class services, meeting managers regularly
and using the banking system as an intermediate
in transactions. This created confidence towards
our customers.
Would you say you are a universal bank?
We are a universal bank, we do everything.
In that framework, are you more focussed on retail
banking or corporate banking?
We go for everything. Retail banking is good because
of cheap deposits. Merchant banking helps with class
one credit, which doesn't deteriorate.
Government and parastatals are class one clients
giving them almost 60% of the portfolio. We also
get depositors by giving services like credit cards,
etc.
Do you know what your market share is in the
banking industry in terms of deposits and assets?
25% and we don't want more.
Your bank has been involved in the financing
of significant projects such as the Kigali Business
Centre, the City Plaza, but those are still very
few. So what are your main areas of differentiation
and development today?
We have huge substantial lines of credit for working
capital of some big companies like Rwandacell. We
are also looking at some new hotel projects, which
we want to invest in.
Are those the two luxury hotels that are going
to be refurbished next year?
Yes, we want to finance those projects. We will
lead the consortium and commit some funds.
And also the new consortium that MTN Rwandacell
will create for the financing of the capital expenditure
with Standard Bank. We want to go into that market
as well because that gives the stability of earning
assets of class one clients. They have experience
in their business and are solid enough to make sure
that we don't lack provision.
The problem with medium and small enterprises is
that they are affected by the economy. When there
is an economic slow down, their repayment rate becomes
low. We have adopted the Basle* guidelines, so then
we don't lack provision, not because the assets
are not good but the economic conditions are tough.
If you don't pay for three months you must avail
provision 25%, six months, 50%, twelve months, 100%.
That is heavy, so we want to get away from those
sectors that are sensitive to economic ups and downs.
Do you think there are enough opportunities for
you to focus on major projects?
Some of these sectors are expanding. For example
the brewery wants to expand, there are new opportunities
for investment.
The National Bank has introduced a new banking
law and various measures relating to banking supervision
have been implemented in order to improve management
efficiency and mitigate risks in the sector. How
do you perceive those measures and their impact
on your activity?
Well I think they are fine, just that their application
was too sudden which is unfortunate. For example
they have installed banking supervision yet the
people in banking supervision in the Central Bank
are not experienced. You find them at loggerheads
with the banks' accountants and auditors. You have
to be a good banker and a good accountant to do
banking supervision and be able to follow up if
there is a problem.
Sometimes it is good to adopt conditionalities from
IMF and World Bank but sometimes they don't understand
that there is a problem of capacity.
All these measures have led banking to less profitability
but these banks are not less profitable because
they have real assets with real value. Unfortunately,
the stringent measures were put in place without
explaining their importance to the public or the
judiciary. |
For example, in the
States if a person defaults on a car or house loan,
the Marshall will come and repossess the property.
In Rwanda, you have to go to court and by the time
you go to court, the person has already sold it
to a brother and ran off to the DRC.
Before you put those reforms in place, you have
to make sure you have looked at everything. You
can't reform banking and not reform the judiciary
that goes with banking.
Another example, if you give a personal loan of
24 months: in America if your credit card cannot
finance your mortgage it is deducted from your pay
check before the rent. In Rwanda, that is not the
case, if a relative is getting married or has died
the entire salary will go to that social function
and the bank will be paid later.
So it is hard to tell Rwandan banks to follow the
three months deadline because culture is very important
in business.
It is IMF that brings these things, if you don't
adopt them, you don't get the money. You have to
be careful when doing these things, involve the
civil society and engage more people who are not
just economists to try and understand the culture.
In Africa the funeral is very important, even in
South Africa they know that, which is why they do
not allow IMF and have developed a plan where people
put money for funerals.
Do you think that banks will have to go through
mergers if they want to remain competitive?
I think there is room for three commercial banks
maximum. So the other ones will have to specialise
themselves to niche sectors.
You have many correspondent banks abroad, including
Citibank, HSBC and others. Do you intend to enlarge
this network or create alliances with foreign banks
to help you develop some areas of your activity?
It depends on where we go. If there is a special
opening with a country where we need a special relationship
with that country. But that is all, doing business
with many banks increases the costs. We want to
consult with our correspondent DZ Frankfurt because
of the Euro, which reduces financial costs.
How do you foresee your bank in the next 5 years?
By all intents and purposes we are number two. We
are the first private bank since the other large
banks are owned by the government. We want to be
the premier financial institution and move to our
new headquarters in 2003.
You are also the President of the Rwanda Private
Sector Federation. How would you describe the dialogue
between the government and the private sector in
Rwanda?
We have gone a long way because since last year
the president has expressed strong interest in strong
partnership between the private sector and the public
sector. He even established a steering committee
on how to formalise this relationship composed of
the Minister of Commerce, the Director in His Office,
the head of Rwanda Investment Promotion and the
bureau of the Private Sector Federation.
There will be a new Forum in the next two months,
which will be a formal forum. We have already completed
our work and presented it to the president. Basically
we are creating a forum where at the highest level
we will be meeting the members of the 14 associations
and provincial associations. We will be meeting
our counterparts in the government at the highest
level chaired by the President to look on a yearly
basis where we are going and review the achievements.
There will also be at the national level a consultative
committee lead by the Prime Minister, which will
review the same thing on a quarterly basis.
For example the private sector has agreed to raise
money to invest in rice and there are two people
with good ideas in terms of export of rice. So the
committee will review the progress made in that
field.
We have a permanent secretariat of that Forum which
will be lead by the Executive Secretary of the Rwanda
Private Sector Federation. He and his counterpart
designated by the Minister Of Commerce will be following
on a day-to-day basis these initiatives.
In your opinion, what are today the main areas
where more incentives from the government should
be further implemented to encourage foreign investment?
The incentives are there, I believe the Rwandans
must be a bit more organised and adventurous. There
are only a few sectors like Electricity, gas and
minerals where we can expect strong foreign direct
investment. We have to be more aware of Human resources,
create a spirit of Enterprise.
I don't believe someone would come from Hong Kong
to set up an avocado processing plant. Yet avocado
can be processed and sold to some refineries in
Marseille or Milan for perfume. These are cottage
industries that Rwandans can set up.
We heard that for these industries, corporate
tax is still very high. Do you think that more incentives
can help?
Corporate tax is 40%, if it is a small family business;
the mangers are already paying themselves so it
doesn't really affect them. Corporate tax is not
as much as Sweden or America.
Today, Rwanda is going through an interesting
transition period. How would you describe Rwanda
as a potential investment destination as compared
to its neighbouring countries?
Rwanda has got some advantages. We have inexpensive
hard working labour, a good government so it is
easy to come in and it is a fairly transparent system
as compared to other African countries.
It is a good destination provided you go into sectors,
which allow you to avoid high transport costs because
of our situation as a land locked country.
So we have to go into specialised products for specialised
needs like pharmaceutical companies, cosmetics,
and roses, generally sectors of high quality and
high value. Textiles and shoes will not develop
Rwanda.
You are Vice-President of the African Round Table,
economic adviser to the President and President
of the Private Sector Federation. You are obviously
very involved in the development of Rwanda. What
is your main ambition for this country?
My main ambition is to achieve regional integration
in the next ten years. I believe in gradualism.
I hope Rwanda will be part of the East African Community,
and that one currency and common tariffs will be
implemented.
NB : Winne shall not be held responsible
for unedited transcriptions |
Mr.
Alfred Kalisa 