Driving financial inclusion in Rwanda
Rwanda has made remarkable progress in financial inclusion over the years, with more citizens gaining access to formal financial services. as of 2020 the country registered 93 per cent financial inclusion. CNBC Africa's Ericks Shyaka spoke to the CEO of BDF, Vincent Munyeshyaka for more.
Tue, 04 Feb 2025 13:19:08 GMT
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AI Generated Summary
- BDF Development Fund's 'partial credit guarantee' serves as a key de-risking instrument, enabling partner financial institutions to lend to MSMEs lacking sufficient collateral.
- BDF's strategies for enhancing financial inclusion focus on capacity building, financial education, and tailored programs to support underserved communities and youth entrepreneurship.
- The success of BDF in bolstering financial inclusion in Rwanda is attributed to collaborative efforts, key initiatives, and a continued emphasis on increasing product uptake and loan utilization.
Rwanda has achieved a remarkable milestone in financial inclusion, with as much as 93 percent of the population gaining access to formal financial services by the year 2020. This success can be attributed to the efforts of the BDF Development Fund, a non-deposit taking financial institution established in 2011 and regulated by the Central Bank of Rwanda, BNR. CNBC Africa's Ericks Shyaka delved into an exclusive interview with the CEO of BDF, Vincent Munyeshyaka, to uncover the key strategies and initiatives driving financial inclusion in the country.
BDF's primary focus revolves around supporting micro, small, and medium-sized enterprises (MSMEs) in accessing finance. Munyeshyaka outlined the clear criteria used to define MSMEs in Rwanda, which includes employing between one to 100 individuals and having an annual turnover ranging from one million to 500 million guanan franc. To facilitate financial access for these businesses, BDF's flagship product, 'partial credit guarantee,' acts as a de-risking mechanism for partner financial institutions. This innovative tool allows banks to lend to MSMEs lacking sufficient collateral, thereby bridging the financing gap.
When questioned about the specific strategies employed by BDF to extend financial services to underserved communities such as individuals with disabilities, women, and rural entrepreneurs, Munyeshyaka highlighted the importance of capacity building initiatives. By investing in financial education, accounting skills, business plan development, and corporate governance training, BDF aims to make these communities 'investor ready' and empower them to access financial services.
In response to queries about youth entrepreneurship support, Munyeshyaka disclosed that BDF has tailored programs targeting youth, women, and marginalized groups. The organization provides high-risk coverage of up to 75 percent and is exploring options to enhance risk coverage further, especially for youth, women, and the agricultural sector. Noteworthy products such as the agribusiness program for youth who have completed technical education demonstrate BDF's commitment to nurturing young entrepreneurs and fostering growth in key sectors.
Reflecting on BDF's impact, Munyeshyaka acknowledged the significant strides made in enhancing financial inclusion in Rwanda since the fund's inception in 2011. He credited collaborative efforts and key initiatives like the creation of BDF for driving this progress. However, he emphasized that the journey towards comprehensive financial inclusion is far from over. While access to financial services has expanded, there is a need to focus on increasing product uptake and loan utilization among the population. Munyeshyaka emphasized that BDF's role in promoting the usage of partial credit guarantees will be pivotal in driving further financial inclusion and fostering economic growth in Rwanda.
As Rwanda continues its journey towards greater financial inclusivity, stakeholders like BDF are poised to play a crucial role in bridging the financial gap, empowering businesses, and fostering economic prosperity across diverse communities.