The National Bank of Rwanda (BNR) is to licence Bank Populaire, a highly successful local savings and credit union with over 150 branches nationwide into a fully-fledged commercial bank. The decision is part of a wide range of recommendations by a team of consultants hired to advise BNR on the financial sector reforms.

It will certainly ambush existing commercial banks whose activities have been limited to the capital, Kigali, and a few other towns.

Banque Populaire has the largest bank depositor base of over 500,000 clients.

Bank Governor Francois Kanimba, told a consultative workshop recently that the decision, supported by the Banque Populaire management, will be implemented at the earliest and would not have to wait for the consultant's report.

"Currently, the Banque Populaire is just a union of cooperative savings and has limitations. It can not open letters of credit to importers and is limited to members only," he told Business Week.

The consultants say existing commercial banks compete for just a handful of multinational accounts and low urban savings at the expense of productive rural areas.

There are just over 60 multi-national companies with 'sizeable' accounts in the country.

They said that with the entry of another giant investor in the financial industry, the banks would be forced into rural banking. There are currently six commercial banks operating in Rwanda.

Banque Populaire and other micro-finance institutions in the country operate a depositor's base that is threefold that of commercial banks, with over one million depositors.

Commercial banks have a collective depositor's base of just over 300,000.

Other recommendations for the financial sector reforms include strengthening banking regulations, encourage banks to explore long term lending products based on salaries and require commercial banks to submit training programmes for staff.

On the development of a stock exchange, the consultants were of the view that Rwanda develops a progressive yield curve for its bonds, extending to seven years initially but later to be extended to 12 years.

Currently, maturity of treasury bills and bonds ranges between six months and a year, with a flat interest.

A progressive yield curve would attract higher interest with the number of years.

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East African Business Week (Kampala)
NEWS
October 9, 2006
Posted to the web October 9, 2006
Kigali

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