The war affected
the whole banking sector. Non-performing loans represent
the main burden of the banking industry as they
represent 49.5% of banks' total portfolio. Since
it is the 1st time our readers are going to hear
about BCR, can you give a brief overview of the
steps that marked the development of BCR over the
past 8 years?
After the war, we had many problems, offices
had been vandalised and documents and money had
been stolen. We have tried to recover some property
but we have not fully recovered.
Most of the banks have been facing the same situation,
but some of them were not broken into like our
bank. That is the main difference; otherwise we
share the same problems. A number of people who
had borrowed from the bank are not in the country
and even those who come back no longer have their
businesses as they were destroyed.
The war did not only create a loss in financial
terms but also human resources. A lot of companies
closed because the management was not there anymore.
Particularly for banks, we have lost a great deal
and yet we still have the liability on the depositors'
side, some of it unlimited because we do not have
the records.
What have been your main challenges since
the war ended?
Our main challenge was to reconstruct the records,
because some of the software and backups were
no longer there. Sometimes we ask the depositor
to prove that he had funds here but it is not
conclusive. So you end up having a liability that
you are not sure of.
Out of this we have made a lot of provisions some
of them hitting the profit and loss account. We
still have those provisions; all the profits made
are taken by a further provision.
What is your current level of non-performing
loans?
It is about fifty percent of the portfolio, it
is still high. If fresh lendings could increase,
then the percentage of bad loans would diminish.
For recovering, the steps are painfully slow.
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?
These measures are not very new. The measures
are the same when you come from one country to
another. It is all about creating efficiency and
trying to safe guard depositors money.
We have been used to these measures although it
is hard to meet them because you still want to
remain in business. You want to lend but if it
is above a limit percentage of your portfolio
you are not allowed to lend. You still want to
do business in transportation but most of the
bad loans are in transportation so you can't go
there.
We understand the banking industry is going
through a tough period of restructuring. At the
same time, drastic measures have been implemented
to reduce risks like minimum reserves and minimum
capital. These are huge constraints to the banking
sector…
Sometimes we feel we are unduly over burdened,
for example if the minimum reserve could also
include foreign currency holdings that would be
a relief.
We need to transact in foreign currency and yet
the stock we have are not considered as part of
the cash you have to support the overall deposits.
Also if they could give some interest on holdings
in the Central Bank.
What is the situation of your net foreign
reserve today and are you satisfied with it?
Our foreign reserve is okay; we hold good accounts
with International organisations, which fund our
offshore account. We don't have many exporters
so most of our offshore funding is through UN
agencies and other NGOs.
It seems contradictory to see that the Ministry
of Finance is pushing banks to support small businesses.
Do you believe you have the tools to provide small
and medium sized firms with the new products they
need to make their business run?
Well the contradiction is not there. It is the
degree of comfort the government can give us as
bankers. If they can provide some insurances or
guarantees covering the small-scale industries,
it will encourage us to lend to that sector. For
example we feel comfortable lending to women associations
and small community development projects because
we have some guarantees to fall back on.
For other sectors, they need to grow by themselves.
Investors need to come with expertise to do business
studies. Some investors just come and set up businesses
without doing feasibility studies and they don't
work out.
Those who try, usually have some partners from
other countries that come and help. There is the
know how, the planning is done and the success
is anticipated.
Today, what is the main sector on your portfolio?
Only merchandising where at least the risk is
not so great in terms of period. We don't have
any industries; coffee and tea are the main exports.
We also do small packaging.
What about the agricultural sector?
The agricultural sector needs a lot of improvement
because we hardly have any commercial activity
in agriculture apart from tea. We finance the
people who buy from small holders although we
do not have a good history with cooperatives because
of mismanagement.
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On which services do you believe your bank
is differentiated from the others?
I think we are better placed in foreign currency
transactions. We may have about 50% of the foreign
currency deposits in this country.
What is your average interest rate?
The interest rates are around 9-10%.
All the banks are diversifying to face competitiveness.
Where are you diversifying? Do you think there
are some products that need to be developed?
I think we are not very sophisticated in this
market; our customers want us to do what we are
doing better. For example, if you invest in information
systems so that all transactions are online, they
will love it. Otherwise we don't have many products.
The more sophisticated we get in Information Technology,
the more we attract clients. We are looking at
electronic banking and customer-activated terminals,
that would increase our portfolio.
Today, what are BCR's main areas of development?
Corporate banking or retail banking?
It is still retail in most cases. We have some
big customers like the Brewery and in the telecommunications
sector but we share them with other banks. We
cannot afford to monopolise them because maybe
their facilities and requirements may be beyond
our capacity.
Most of the services for the small and medium
businesses are still the usual ones.
What is your investment strategy in terms
of upgrading your infrastructure, your services?
The more offices we have the better. For example
we are assisting in revenue collection at their
warehouses, the Airport and offices. Instead of
people coming here and then taking the proof of
payment, we have the offices there. It is not
yet linked online but that is what we want to
do to help in management and accounting.
Do you have any intention to open your capital
to foreign investors?
Yes we do, the government has a plan of divesting.
Only, they have the burden of the bad loans that
do not look good on the balance sheet. Prospective
investors may capitalise on that and offer low
prices.
What will be the next step before opening
capital?
The capitalisation. Fortunately, if you have
the backing of the government, collection becomes
easier. Luckily we do not have politicians on
our portfolio like other banks owned by the government,
so our loans can be collected without political
backlash.
Apart form your shareholder in Belgium; do
you have any partnerships or cooperation with
any financial institutions around the world?
No, we do not. We have correspondent banks although
the monopoly was with the shareholder in Brussels.
Recently, it has become evident that you need
a bank in the US for dollar operations because
there is a time lag before you complete your transaction
if you are using a bank in Europe. We have a relationship
with Bank Of America New York and we are also
going to begin using Citibank so that we have
diversity.
Do you have any deals or operations with the
Asian market?
Mainly for the importation of machinery, vehicles
and maybe the household items. It is becoming
more and more competitive than the traditional
European markets. I am not sure if freight is
not more expensive but it is becoming more competitive.
On Rwandan roads, you find more Japanese cars
than anywhere else and they are not coming from
Europe.
So the market is there but for the finances it
seems they still go through Europe, Dubai and
America, as we do not have direct relationship
with the Far East.
How would you describe Rwanda as a potential
investment destination?
If the government continues to encourage development
of infrastructure, right now communication is
an emphasis. The more developed the infrastructure
is the more investors come in and they encourage
their partners back home to come and invest.
With good cooperation from the government, giving
incentives for Investment, I think Rwanda is a
good investment destination. I think the current
Minister of Finance and his team are doing a good
job.
Today you are the MD of BCR. Can you give
a brief history of your professional experience
and what would be your personal challenge over
the next few months?
I studied BSc Accounting and then I started working
in a bank as a Cadet in Banking. I worked in banks
for almost 12 years although when I came to Rwanda
I worked for MTN, I had the opportunity to learn
how to run the finances of a company.
The combination of the two makes me confident
that not only am I a good banker but I am able
to control and monitor other expenses.
NB : Winne shall not be held responsible for
unedited transcriptions
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RWANDA
Mr.
Ephraim Turahirwa