The Growth of Microfinance in Rwanda

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Rwanda is a beautiful country located in Africa; it shares its borders with Uganda, Burundi, Congo and Tanzania. It is the second smallest country in Africa and despite this fact; it is one of the most populated countries in Africa. Rwanda is a place with few industries, but in the recent years, it has experienced significant growth in infrastructure, international investment and tourism. Agriculture contributes about 34% of its GDP and apart from this its major contributors of GDP are Construction industries, Import and export industries and importantly financial institutes. Rwanda exports coffee, tea and other minerals to countries like china, US, Germany from where it gets major sources of income. Though Rwanda was once seen as the poorest countries in Africa, they have made all the efforts to become economically strong.

Rwanda is said to have one of the lowest savings ratios in Africa and only 10% of the population own a bank account. This clearly makes it evident that microfinance sector has a very crucial role to play in providing financial services to this land. Before the genocide of 1994, the growth of microfinance sector in Rwanda was very slow, however after the genocide, large amount of donor funds were directed into relief orientated microfinance initiatives which stimulated the growth of the sector.

Rwanda has seen a lot of savings and credit cooperatives in the recent past.  The UBPR (Union des Banques Populaires du Rwanda) is one of the most significant cooperative which also serves about 36% of the total microfinance market in Rwanda. It holds 60% of loans and deposits. Some of the micro lending programs which were launched by the NGO’s in the recent past have successfully grown their loan portfolios. There are a lot of micro finance institutions that are helping the Rwanda market financially; some of the popular ones are Urwego opportunity bank, vision finance company, Rwanda Microfinance Limited etc. Urwego is considered as one of the major players on the Rwandan microfinance market.

Like many other countries in Africa, Rwanda has also followed the economic liberalization program. It has now privatized the financial sector in order to reduce the financial repression; it has also encouraged market determined prices of financial services and increased market competition. The Government of Rwanda started the Financial Sector Development Program way back in 2006, it aims to develop a stable and broad financial sector that can sufficiently mobilize and allocate resources to address the development needs of the economy. After being tagged as one of the poorest nation once up on a time, the way the people of Rwanda have fought back to grow financially is commendable. The microfinance sector is sure to go on a growing spree in this beautiful country.