 Finance
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As the Rwandan economy gains momentum with a 6%
growth in GDP and inflation maintained at as low
as 3.5%, the banking sector is weak and recovering
from the after effects of the genocide of 1994.
According to official documents, central bank
reserves grew by $24million (FRW12 billion) in
the year 2001 while commercial banks foreign reserves
declined to $8.2 million (FRW 4.1 billion). There
are two major commercial banks that were partially
state owned, Commercial bank of Rwanda (BCR) and
Bank of Kigali (BK) and three smaller privately
owned banks, Banque Continental Africaine du Rwanda,(BACAR),
Bank of Commerce, development and Industry (BCDI)
and COGEBANQUE. Rwanda development Bank (BRD)
is a large investment bank dealing in real estate
financing.
Total deposits were estimated at $300 million
against outstanding loans of $200 at the beginning
of 2001. But plagued by a huge non-performing
portfolio, the financial sector has largely confined
itself to financing trade.
Domestic lending fell by 8% in 2001 though indications
in the first quarter of 2002 showed a significant
improvement rising up to $90 million. The risk-averse
financial sector responded to non-performing portfolio
of 46% of Banks' total portfolio. Agriculture received
only 2 percent of the credit disbursed by the banks
raising concern about the sector's long term prospects.
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Union des Banque Populaire,
a network of cooperative banks, which caters for
both the urban and rural population, represents
over 95% of the micro-Finance sector. The National
Bank of Rwanda (BNR) with the help of the IMF introduced
several reforms related to capital adequacy ration
minimum capital requirements and strict supervision
measures.
"When we started our restructuring measures
with each bank, we set up a timetable for each
bank to reach the required adequacy ratio on time."
Says the governor for Rwanda's Central bank Mr.
Francois Kanimba.
Although the reforms continue to bear fruit,
the banking industry continues to suffer from
non-performing loans making most of the commercial
banks vulnerable. The banks also need to upgrade
the quality of their human resource.
On the other hand the Rwandan government had
embarked on a long-term divestiture program aimed
at privatizing state owned banks. Finance Minister
Dr. Donald Kaberuka stresses that the program
comes in place to improve efficiency and performance
of State owned banks. Rwanda Commercial Bank BCR
has been lined up as the first to be privatized.
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Introduction
