FIT FOR FINANCE – YOUTH TRAINING IN RWANDA Module 2 Getting familiar with the existing finance options
Online training - Thursday 20th May
with the financial support of Welcome to Training - II
Your trainers today:
Ross T. Nathan (+250 788381600) [email protected] [email protected]
Olawale, Rotimi Opeyemi [email protected]
Please contact Rotimi for any technical problems you may encounter during the webinar either in the chat or write into our WhatsApp group.
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Mute Audio Support: Keep your mobile in silence mode Raise your hand, if you want to speak Seek help if you have issues connecting Use zoom chat to communicate privately Message if you have a question to ask. Message if you need to leave for short break RN Overview of the Learning Webinar Series
• Guiding youth to assess and improve on their own financial th Module 1 status. – 13 May’2021
• Getting familiar with the variety of products and services that Module 2 financial institutions offer in Rwanda
• Receiving guidance to aid your decision-making abilities when Module 3 choosing the adequate finance solution for themselves.
• Business formalization Module 4
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Module 2: Getting familiar with the existing finance options Go to menti.com or join via the link in the chat to share your views. What is one thing you learned in the previous session?
https://www.menti.com/bz7jnvweji RN
Module 2: Getting familiar with the existing finance options Recap: 1st session you learnt the following topics
Basics of financial Assessing your Financial goals knowledge financial status quo
Money management What is needed to & qualify for funding Savings
Module 2: Getting familiar with the existing finance options Agri-business contribution to Rwanda GDP
Agriculture contributes about 30% of Gross Domestic Product
Providing livelihoods for over 70% of the population
But the agriculture sector receives only 6% of loan products and services, according to central bank data.
Module 2: Getting familiar with the existing finance options In this Session II- we will learn the following topics
1. Rwanda Financial Sector overview and products available
2. Financial Jargon’s used by Financial Institutions
3. Digital Financial services overview
4. Funding options and their Pro and cons.
5. Risk Management and Insurance
6. The 5C’s of Credit . What the Financial Institutions look for, in you
Module 2: Getting familiar with the existing finance options Go to menti.com or join via the link in the chat to share your views. https://www.menti.com/bz7jnvweji Name some the Financial Service Provides (FSPs) in Rwanda?
RO
Module 2: Getting familiar with the existing finance options Rwanda Financial Sector 600 Regulated Financial Institutions 11 Commercial banks, Rwanda also has Business 3 Microfinance banks, Development Fund (BDF), BRD which provides Guarantee funds, 1 Development bank Grants and has dedicated window 1 Cooperative bank for Agri Enterprises.
19 Micro Finance Institutions ( Limited Liability) 6 Lending-only institutions You need to choose the 416 Umurenge SACCOs; right financial
22 Non-Umurenge SACCOs Institution to approach based on your need, 14 Insurance companies institutions your capacity and 13 Pension schemes ( 12 private) Business 94 foreign currency dealers and remittance co Module 2: Getting familiar with the existing finance options Microfinance Limited Companies and MF Banks Rwanda Name of Microfinance Institution Contact Persons email ids 1 Asa microfinance Jamilur Rahman Chowdhury [email protected] 2 Brac Tapan KUMAR Karmaker [email protected] 3 Amifa Charles KAYUMBA [email protected] 4 Amasezerano CB PLC Froduald MUNYANKIKO [email protected] 5 Caf-isonga ltd MUHIRE Gerome [email protected] 6 INKINGI micro finance PLC MUKAMISHA Bernadette [email protected] 7 Rim ltd GATERA N, Damien [email protected] 8 Vision finance company ltd Grace DUSHIMIMANA [email protected] 9 Goshen finance plc Ignace MUSANGAMFURA [email protected] 10 Sager ganza (ex swoft)plc Julien MAFUTALA [email protected] 11 Letshego rwanda plc Ben Muketha [email protected] 12 Umutanguha finance PLC NDAHAYO Jules Théoneste [email protected] 13 Copedu plc Raissa MUYANGO [email protected] 14 Duterimbere IMF plc NZASINGIZIMANA Dative [email protected] 15 CLECAM EJOHEZA ltd DUSABUMUREMYI Merchias [email protected] 16 Inkunga finance PLC NSENGIMANA Claudien 17 Cmf-umulimo BIGIRIMANA Elie [email protected] 18 Axon tunga microfinance SIBOBUGINGO Simeon [email protected] II. MICROFINANCE BANKS 1 Unguka Bank plc KAGISHIRO Justin [email protected] 2 Urwego Opportunity Bank plc Christine BAINGANA [email protected] 3 AB BANK Arah SADAVA Module 2: Getting familiar with the existing finance options Commercial Banks Rwanda
Sl no Name of Bank Name SME dept Email id
1 Access Bank Rwanda Umuhoza Natacha Sandrine [email protected]
2 Bank of Kigali (BK) Jean Pierre Iyamuremye [email protected]
3 I&M Bank Delphine Mushashi [email protected]
4 BPR Atlas Mara Gilbert Rukundo, [email protected]
5 Ecobank China Fauzia [email protected]
6 Equity Bank Denis Kayumba [email protected]
7 GT Bank Gatanazi Joel [email protected]
8 Kenya Commercial Bank Jean Claude Kabananiye [email protected]
9 Cogebanque Polepole Kayumba [email protected] 10 Bank of Africa Darius Mukunzi [email protected] 11 Zigama CSS 12 Development Bank of Rwanda 13 NCBA Bank Rwanda PLC
Module 2: Getting familiar with the existing finance options Savings products available in Rwanda
Individual Fixed Term Time Deposits Mobile Savings Savings Deposits account • Fixed sum for a pre- account determined term and rate of • Regular deposits of fixed interest • Voluntary timing and amounts over a pre-determined • Requires a minimum deposit period of time. • Offered by MTN and AIRTEL amount of deposits • Inflexible • Client can decide how much to • Have started to pay interest • Pays a higher interest rate • Flexible withdrawals save for how long.-Penalty is on deposits (although sometimes clients paid for early withdrawal than either a passbook or fixed term for the same • Flexible but very tempting need to give 3 or 4days • Interest is usually higher than on to use for wants than needs notice for withdrawal) passbook savings amount of savings • Can borrow against your savings • Not many financial • Usually earns interest institutions offer this product
Module 2: Getting familiar with the existing finance options Brainstorming Session Name some loan products you know? And Name a FSP which offers this loan ?
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Module 2: Getting familiar with the existing finance options Loan products available in Rwanda
Consumption Individual small loan/ Personal Home loans Group loans business loans Loans/Salary /Mortgage loans loans
Agriculture loans /Farming Vehicle loans MSME /SME loans Leasing /Horticulture/live stock
Equipment /Asset Overdraft /working School Loan loans capital
Check websites : Eg. https://www.mftransparency.org/microfinance-pricing/rwanda/012-Urwego/
Module 2: Getting familiar with the existing finance options BK Bank Agriculture Loans
AGRICULTURAL LOANS We like to work with farmers who are organized in groups such as local cooperatives as it is easier to support them with capacity building. BK provides finance • Production • Processing • And distribution ventures. For all Agriculture Value Chains
Module 2: Getting familiar with the existing finance options Equity Bank Agriculture loans ( April 2021 News)
• Zamuka Muhinzi Agri products also include • The products include the commercial agriculture working capital agriculture commercial trade loan finance facilities covering • The minimum loan amount is Rwf10,000, while the maximum loan invoice discounting, contract is Rwf 3.5 billion. financing and purchase order • The loan term is between two months and 36 months depending on the nature and cycle of the business. financing. • “Igire Muhinzi”. The loan size starts from • Asset based finance, this product is commercial agriculture Rwf500,000 to Rwf3.5 billion. investment loans . • Loans range from Rwf5 million to Rwf3.5 billion. The minimum repayment period is • the loan term is between 12 and 60 months for movable be one month while the maximum assets, and 10 years for immovable assets. repayment period shall be 6 months.
Module 2: Getting familiar with the existing finance options Unguka Bank Products to Agri businesses
Product Description Eligibility Criteria • Be an Unguka Bank Ltd customer with 2 months relationship period. • UB facilitates the Irish potatoes farmers • For group lending-Individual accounts and group (Group of borrowers; Individuals; account for beneficiaries will be required. Farming related cooperatives) by • Be involved in the potato farming. offering them a special product called • Owning land used for farming or authorization "IKUNGAHAZE MUHINZI". for using it. • Identification documents (ID/Passport). • Loan application and justification of repayment • This agriculture loan is payable in season capacity. period. • Material Security and interpersonal guarantee for group borrowers. • Optional weather risk insurance cover. • Mandatory customer life insurance cover.
Module 2: Getting familiar with the existing finance options Umutangwa Products to Agri businesses
AGRICULTURAL LOANS UFC Plc offers agricultural loans structured on agriculture value chain components. Where we have 4 products in agriculture sector: • Farm Production Loan
• Post-Harvest Loan
• Agricultural Inputs Loan:
• Agric-asset Loan Features of agriculture loans made flexible to be tailored to the farmers' cash flow, depending on his/her crop or value chain
Module 2: Getting familiar with the existing finance options Umutangwa Products to Agri businesses- details 1. Farm production loan: UFC’s Agriculture production loans are short-term (seasonal) working capital loans that are extended to individuals and, farmers’ cooperatives, registered companies and farmer groups. 2. Post-Harvest Loan: The loans are intended to finance the procurement of agricultural produce and associated marketing costs such as for bulking, handling, packing and transportation. 3. Agricultural Inputs Loan: The loans are intended to finance the inputs procurement and distribution dealership requirements during a given input marketing period. 4. Agric-asset Loan: Agricultural asset/equipment loans are medium to long-term loans that are extended to individuals, cooperatives and registered companies to finance the procurement of agricultural assets/ equipments.
UFC finances almost all crops produced in Rwanda but the main crops financed are: irish potatoes, maize, vegetables, banana, tea and coffee. Also loans available for animal husbandry mainly dairy and poultry. Loans upto Rwf 5 million disbursed at branch level.
Module 2: Getting familiar with the existing finance options Urwego Bank Agriculture Loans.
AGRICULTURAL LOANS Urwego offers working capitals loans to finance seeds and fertilizers for farmers, organized in cooperatives, working with following crops: coffee, rice, irish potato and maize. • Irish Potato loans • Coffee farmers loan • Maize Farmers loans • Rice Farmers loan Features of agriculture loans made flexible to be tailored to youth sector , as per the management
Module 2: Getting familiar with the existing finance options BDF Products to Agri-businesses
BDF Guarantee Fund BDF works with the financial institutions (Banks, MFIs and Saccos) to cover a between 50 and 75% of collateral required by the lending • Fixed Assets loan Guarantee Scheme institution. • For Working Capital loan –Guarantee
BDF Grants • BDF Grants for post-Harvest • BDF grant available for Rwanda Dairy Development Project
BDF quasi Equity Facility
BDF Agribusiness Financing
Module 2: Getting familiar with the existing finance options I. BDF Guarantee Fund • The maximum guaranteed amount is 500 million francs for Agriculture campaign and 300 million francs for other sectors • maturity period of 10 years. This facility can be availed by youth and do not have any special incentive for youth.
1.Fixed Assets loan Guarantee Scheme: 2. Working Capital loan –Guarantee
• All MSMEs, individuals, associations, coops & • All MSMEs, individuals, associations, coops & Cos. Eligibility: Eligibility: Cos.
• Property, plant, equipment, land, buildings, motor Categories of Categories of •All sectors of investment lasting less than 3 year vehicles, furniture, fixtures, livestock, cottage industries, •Short term agric. Campaigns, trading & commerce Investments: refrigerators Investments:
• Maximum to 1 year for Agric. Campaign • Maximum to 10 years Maturity: Maturity: • Maximum to 3 years for trading MSMEs
• 30% of total risk for ST agric. Campaign • 50% – 75% range of total risk on investment loans Risk Coverage: Risk Coverage • 50% of risk for trading MSMEs
Guaranteed • Limited to Rwf 500 M in agriculture Guaranteed • Limited to Rwf 500 M in agriculture campaign Amount: • Limited to Rwf 500 M in all other sectors (Non- Agri.) Amount: • Limited to Rwf 20 M for working capital loans
• Approach your financial institution • Approach your financial institution (Bank/MFI/SACCO) to (Bank/MFI/SACCO) to go through the full How to Apply: : go through the full credit application process. How to Apply: credit application process .
Module 2: Getting familiar with the existing finance options II.BDF Grants
3. BDF Grants for post-Harvest 4. BDF Grants for Rwanda Dairy Development Project. It’s a program that is intended to promote investments in growing of beans, cassava, Irish potatoes, maize, Horticulture and dairy products in the It’s a program that is intended to promote investments in milk value chain following districts: products in the following districts: • Northern province – Musanze • Northern province – Musanze, Gicumbi, Burera • Eastern Province – Gatsibo, Kayonza, Ngoma,Nyagatare, and Kirehe. • Eastern Province – Kayonza, Rwamagana,Nyagatare • Western Province – Nyabihu and Rubavu • Western Province – Nyabihu Rubavu and Rutsiro • Southern Province – Muhanga, Ruhango, Nyanza, and Kamonyi. • Southern Province – Huye, Ruhango andNyanza Activities that are supported by PASP grant Activities that are supported • Milk collection centres, Milk processing centres, Storage facilities • Construction of collection centres, Dryers, Construction of Stock/Storage facilities, • Transportation and packaging materials, veterinary pharmacy Transportation and packaging materials • Boreholes, Equipment for milk processing. • Other different items for post harvest handling (weighing scales, Maize Peeling machines, Eligibility Milk Cans, Moisture Testing, Machines… Etc) • Companies: Private-led business plans( companies that have signed supply contacts with cooperatives) • Cooperatives-led business plans (cooperatives with viable business plans) Eligibility • Joint ventures (companies investing together with cooperatives. • Cooperative driven business plans( cooperatives in category (1&2). • All SME, Individuals, Associations and Cooperatives.
How to Apply: • The client approaches BDF Branch in districts where the districts where the project will be implemented. • BDF helps in Business Plan development Business Plan and all supporting documents are sent to BDF through the Web system.
Module 2: Getting familiar with the existing finance options III & IV -BDF Quasi Equity facility III. Quasi-Equity IV. Agribusiness Financing – (part of Quasi Equity)
• BDF supports agribusiness projects in combined production and agro-processing through • Quasi-Equity is a product designed to small & medium quasi equity scheme where BDF co-invests with the project promoter (owner). • The package provided to viable agribusiness projects is made up of the promoter’s enterprises (both start-ups and those already contribution of 10% of the amount requested from BDF, a grant of 30% and BDF convertible operating) given through a mixture of debt and equity. shares of 60%. • The ceiling of the loan amount under this scheme is 10,000,000 Rwf given at an interest of 12%. Types of projects that can be financed through this product: • Aquaculture projects • Modernized livestock and agriculture farming • The Quasi-Equity is a mix of debts and equity whereby • Horticulture the debt portion pays a subsidize interest rate • Agro processing projects. Eligibility Criteria. • It should be an agribusiness project owned by a Rwandan citizen • The owners of the project should be secondary and university graduate but who have spent at least 2 years after graduating • The project should demonstrate job creation potentiality (in position to employ a reasonable number of people more especially University graduates) NB: Loan amount that BDF provides through Quasi Equity • Beneficiary should be a cooperative/company is Rwf 15 Million and above depending on the funding • The project should have a sense of innovation • The projects should be start-up projects with less than one year of existence available. • The project should fall under combined production and agr0-business or agro- processing Apart than the above BDF provides Advisory Services, Equipment Leasing and ICT services but these are not focussed to Agriculture businesses
Module 2: Getting familiar with the existing finance options The Economic Recovery Fund (ERF) The Economic Recovery Fund (ERF) was established by the Government of Rwanda to support the recovery of businesses hardest hit by COVID19 so that they can survive, resume operations and safeguard employment, thereby cushioning the economic effects of the pandemic. Microbusiness -SPECIFIC TERMS AND CONDITIONS Working Capital -GENERAL TERMS AND CONDITIONS
• Borrowers may access up to FRW 5 million under the micro business window subject to the Bank’s single • This window is available to customers who obligor limit and the borrower’s repayment capacity. demonstrated a negative impact on their operations caused by the COVID19pandemic, proven by at least 30% • MFIs or SACCOs shall grant loans to micro businesses at an interest rate of eight percent (8.0%), tenor of two year-on-year (2019 Vs 2020 on moving period) losses years (2) and grace period of three months (3). based on VAT Turnovers submitted to the RRA. • Borrowers shall be determined as SMEs or Micro business based on their 2019 annual turnovers declared to RRA for • Informal microbusinesses should present payment of purpose of Corporate Income Tax (CIT); local taxes “Ipatanti” as proof of good tax standing. • SME is a business with annual turnovers of between RWF 20M RWF to 500M and Micro business a business with • Existing facilities/loans for any borrower, should have annual turnovers less than RWF 20M been performing as at end Feb 2020 (class 1 or 2). • Borrowers can only access this fund once across the sector
Module 2: Getting familiar with the existing finance options Brainstorming Session Name some Loan Terminology /Jargon’s –words used by FSP’s
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Module 2 : Guiding Youth to Assess their own Financial Status Bank Loan Terminology /Jargon’s –words used
• The situation of having missed a loan payment. If you're up to date with your loan Arrears repayments, you're "in good standing." If you're late with a payment, you're "in arrears."
• Property that you promise to give to a lender in the event you fail to repay a loan.. The house or car Collateral title is collateral. If you don't repay, the lender may take ownership of the house or car.
• Credit Reference Bureau -A company that maintains reported borrowings and CRB repayment of consumers. And produces Credit score for individuals • Cash flows refer to the movements of money into and out of a business, typically Cash Flow categorized as cash flows from operations, investing, and financing
• Equity investments typically take the form of an owner's share in the business, and often, a share in Equity the return, or profits. Equity investments carry greater risk than debt, but balance returns
•A legal contract between a lender and a borrower. The loan agreement details the obligations and responsibilities of the lender and the borrower. It includes all the details of the loan such as interest rate, term, repayment details, Loan Agreement penalty, etc.
• Generally viewed as the extended failure to meet a financial obligation or loan agreement that places Default the lender in fear of your inability to make future payments. • Interest is the cost of using a lender's money. A borrower pays interest, and a lender earns interest. Please know there are Flat Interest , Declining Interest and Floating Interest ( Flat is most expensive Interest and declining rate is the best ) • The amount borrowed on a loan. When you make a payment on a loan, the principal goes down by the amount of the payment less the interest portion of the payment. Generally, when the principal Principle reaches Rwf 0, you've paid off the loan. • A fee that may be charged to a borrower for not making a timely loan payment Late fee/Penalty according to the terms of the Loan Agreement.
Module 2: Getting familiar with the existing finance options Bank Loan Terminology /Jargon’s – more words used…
• The amount you need to repay which is scheduled to be paid back in equal installments. Having a fixed Loan Installment sum as your payment obligation makes it easier to budget for than a loan with unequal payments. • Broadly, all the money and other property of a business used in transacting Capital its business.
• The contractual amount of time that a borrower has to pay back a loan . For Eg. You need Term to pay Rwf 50,000 for one year
• An amount owed for funds borrowed. The debt may be owed to an individuals, banks, or Debt other institutions.
Bad Debt • A debt that is not collectible and is therefore worthless to the creditor.
• A moratorium period is the time during a loan term when the borrower is not required to make Moratorium any repayment. It is a waiting period before which repayment of EMIs resumes. • Is the contribution you are brining in to obtain a loan . For Eg. If a cost of tractor is Rwf 1 million, Margin You can say you have Rwf 100,000 and you request the bank for Rwf 900,000 loan . Here your margin is 10% and 90% loan • A lease is a contract where the lessor allows the lessee to use an asset for a specific period in Leasing return for a periodic payment. In most cases the asset is the collateral in finance leasing Grace period • The extra time given by your Financial Institutions to repay your loan
Module 2: Getting familiar with the existing finance options Interest Rate, Types and Calculations methods
What is Interest and Types of Interest? •Interest is the price you pay to borrow money. Fixed or Flat Interest When a lender provides a loan, they make a profit on top of the original loan amount OR Declining Interest or Amortized Rates
•Interest is the amount of money a lender or financial institution receives for lending out Floating Interest money.
Simple Interest (Savings and Loans) •Typically expressed as an annual percentage rate (APR/PA). •Eg. say you borrow Rwf. 1,000,000 for three years at a 10% Compounding Interest ( Savings and loans) interest rate (PA). Your interest would be Rwf 100,000-per year .
Module 2: Getting familiar with the existing finance options Types of Interests
Fixed or Flat Interest Rate :Under this system, the interest rate Pmt Payment Beginning Scheduled Ending No. Date Balance Payment Principal Interest Balance on the loan amount is fixed and remains constant throughout 1 01/08/2008 RF1,000,000 RF36,111 RF27,778 RF8,333.33 RF976,066 the loan period ( You will be paying a lot of interest) 2 01/09/2008 RF976,066 RF36,111 RF27,778 RF8,333.33 RF951,933 3 01/10/2008 RF951,933 RF36,111 RF27,778 RF8,333.33 RF927,598 •Eg. say you borrow Rwf. 1,000,000 for three years at a 10% interest rate (PA). 4 01/11/2008 RF927,598 RF36,111 RF27,778 RF8,333.33 RF903,061 Your interest would be Rwf 100,000-per year and for 3 years you pay interest of 5 01/12/2008 RF903,061 RF36,111 RF27,778 RF8,333.33 RF878,320 Rwf 300,000. 6 01/01/2009 RF878,320 RF36,111 RF27,778 RF8,333.33 RF853,372 7 01/02/2009 RF853,372 RF36,111 RF27,778 RF8,333.33 RF828,216 8 01/03/2009 RF828,216 RF36,111 RF27,778 RF8,333.33 RF802,851
Declining Interest Rate: under this system, interest calculation Pmt Payment Beginning Monthly Ending is based on the outstanding loan balance and interest reduces No. Date Balance Payments Principal Interest Balance 1 01/08/2008 RF1,000,000 RF32,267 RF23,934 RF8,333 RF976,066 after every Instalment ( You pay low interest) 2 01/09/2008 RF976,066 RF32,267 RF24,133 RF8,134 RF951,933 •Eg. say you borrow Rwf. 1,000,000 for three years at a 10% interest rate (PA). 3 01/10/2008 RF951,933 RF32,267 RF24,334 RF7,933 RF927,598 Your interest would be Rwf 100,000-per year and for 3 years you pay interest of 4 01/11/2008 RF927,598 RF32,267 RF24,537 RF7,730 RF903,061 Rwf 169,619 5 01/12/2008 RF903,061 RF32,267 RF24,742 RF7,526 RF878,320 6 01/01/2009 RF878,320 RF32,267 RF24,948 RF7,319 RF853,372 7 01/02/2009 RF853,372 RF32,267 RF25,156 RF7,111 RF828,216 8 01/03/2009 RF828,216 RF32,267 RF25,365 RF6,902 RF802,851
Floating Interest Rate : Under this system the Interest rate may go up or down as interest rates in the wider market change.
Interest Rates in Rwanda : Interest Rates in Financial Institutions range from low of 14% to high of 24% Lets now learn about Funding and options
Lets discuss the questions below.. https://padlet.com/rosstn/ikfu3792e1iovjs1 How do you fund your business? What are your funding options ?
Go to padlet.com
or join via the link in the chat to share your views. RO
Module 2: Getting familiar with the existing finance options Options for Funding your business (SME)
Equity Funding Equity financing involves raising money by offering portions of your company, called shares, to investors. Crowdfunding is the practice of funding a project or venture by raising small amounts Crowd Funding of money from a large number of people, typically via the Internet. In 2015, over US$34 billion was raised worldwide by crowdfunding.
Grant Funding A grant is a sum of money awarded to your business from a government, corporations, foundations or a trust, that you don't have to pay back. Project based Project funding is the means by which the money required to undertake a project, funding programme or portfolio is secured and then made available as required.
A loan is when money is given to another party in exchange for repayment of the loan Loan principal amount plus interest. Loan terms are agreed to by each party before any money is advanced.
Module 2: Getting familiar with the existing finance options Equity funding –Some examples
Quasi Angel Venture Equity Investors Capital Funding
Angel investors are Venture capital Venture capital co investors with a firms provide invest with significant amount funding in promoter and can of money who exchange for be combination of provide financing ownership, or for startups. Some debt, grant and shares, of your equity. These angel investor business. Venture groups actively investors may be seek early-stage capitalists are wealthy individuals, companies in which looking for high private pension to invest and they rates of return funds, investment provide technical when they invest companies, and and operational their money in a others. Eg: BDF in knowledge to start-up small Rwanda startup ventures. business.
Module 2: Getting familiar with the existing finance options Digital Finance • What is Digital Finance Benefits of Digital Financial Services(DFS): • Digital finance is the term used to describe the impact of new technologies on the financial • Accessible everywhere services industry. It includes a variety of products, • Very Easy and efficient applications, processes and business models that have transformed the traditional way of providing banking and • Save lots of time and financial services. resources • no more waiting in queues for banking services • Mobile money: • Every transaction is updated • About 87% (6.2 million adults) in Rwanda have on real-time access to a mobile phone Around 3 in 5 (61%) • Ease of decision making adults use mobile money and more males (68%) • Reliability and Flexibility in have mobile money accounts as compared to affecting a transaction women (56%). • Eco-friendly • Key barriers to the uptake of mobile money relate to lack of product knowledge and lack of interest in the product. Finscope 2020
Module 2: Getting familiar with the existing finance options Lets now learn about …. Risk Management and Protection Group Discussion , please answer these questions We are going to have 3 groups now. 01. What is Risk? Types of Risks?
02. What is Insurance ? What types of Insurance you know?
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Module 2: Getting familiar with the existing finance options Risk Management and Insurance
What is a risk? • In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/ implications of an activity with respect to something that humans value, often focusing on negative, undesirable consequences
What is Insurance ? • Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to protect against the risk of a contingent or uncertain loss. • An entity which provides insurance is known as an insurer, an insurance company, an insurance carrier or an underwriter.
Module 2: Getting familiar with the existing finance options Types of Risks
1. Personal risk: 2. Property or liability risk:
• Illness, permanent disability (loss or • Theft, fire, cattle death, natural damage of part of one’s body), calamities accident, death of a family members
Risks are numerous and they can have a terrible impact on our lives, families, property, business, and livelihoods, if it is not managed. • Lets identify protection measures youth take to manage risk? • 1. • 2. • 3. • And why should we have protection measures?
Module 2: Getting familiar with the existing finance options Concept of Insurance Types of Insurance in Rwanda
• Insurance is a Loan Crop Livestock insurance Insurance insurance protection in the Theft Accident Fire form of monetary insurance insurance insurance compensation for a Health Life Funeral loss that is linked to insurance Insurance Insurance
an unpredictable Education Vehicle Pension event or risk. Insurance Insurance Insurance Marine Travel Insurance Insurance
Module 2: Getting familiar with the existing finance options Agricultural insurance is one of the de-risking tools of Agriculture Insurance Agriculture sector. Its purpose is to reduce the risk profiles of Products in Rwanda agricultural value chain actors and thereby increase the appetite of lenders and investors to the sector. The National Agriculture Insurance Scheme (NAIS),
• launched on April 23, 2019 by the Ministry of Agriculture and Animal Resources (MINAGRI).
• To mitigate risks and losses incurred by farmers due to unpredictable natural disasters, pests and diseases that affect their livestock and crops.
• Dubbed “Tekana Urishingiwe Muhinzi Mworozi,” the scheme also enables the farmers to easily access financial services and ensure flow of credit to the agriculture sector. It operates in all 30 districts of the country.
• Insurance scheme covers dairy cattle including both cross and exotic breeds, and rice and maize in crops. The insurance scheme will be extended to many more crops including beans, soya beans, Irish potatoes, cassava, banana, French beans and Chili, and animals such as poultry and piggery.
Module 2: Getting familiar with the existing finance options Insurance Companies in Rwanda PRIVATE INSURERS 1. SONARWA General Insurance Ltd 7. SONARWA LIFE ASSURANCE Licensed in 1975 Licensed in 2012 (After separation of life and non-life business) 2417, Bld de la revolution, PO BOX 1035 KIGALI, NYARUGENGE- 2417, Bld de la revolution, P.O. BOX 1035 KIGALI, NYARUGENGE- Telephone:KIGALI +250252572101/2/3, 252592100, 252573350, Fax: +250 Telephone:KIGALI +252592119/252573351, Fax: -252573351 E-mail: [email protected] Web site: www.sonarwa.co.rw Web site: www.sonarwalife.rw 2. SANLAM ASSURANCES GENERALES Ltd. 8. UAP INSURANCE RWANDA LIMITED
Licensed in 2010 (After separation of life and non-life business); Licensed in 2013 Bld de la revolution, PO BOX 924 KIGALI, NYARUGENGE-KIGALI CITY. Grand pension Plaza – 7th Floor, P.O. Box: 6644 Kigali, Rwanda. Telephone: +250252573712, +250252593300, Fax: +250573362 Telephone: +250 252 500905-7, Fax: +250 252 500908 E-mail: [email protected] Web site: www.soras.co.rw E-mail: [email protected] Web-site: www.uap- 3. SANLAM ASSURANCES VIE LTD group.com9. RADIANT INSURANCE COMPANY
Licensed in 2010 (After separation of life and non-life business) Licensed in 2013 Avenue de la Jeunesse, KN 71 ST, P.O. Box 2616 Kigali, KIGALI- KN 76 STREET Telephone:RWANDA (250) 727 555 333 / 0788 185 300 Telephone: +250280666421 E-mail: [email protected] Website: www.sorasvie.rw E-mail: [email protected] Web-site: www.radiant.rw 4. PRIME INSURANCE LTD 10. BRITAM INSURANCE COMPANY
Licensed in 1995 Licensed in 2013,Kigali Shopping Mall, 5th Floor Po Box 2753 Kigali, NYARUGENGE-KIGALI Telephone: MTN : +250 788 380 737 ; Tigo : +250 728 380 737 Telephone: +250788150100 E-mail: [email protected] Web-site: www.britam.rw 5. MUA 11. BK GENERAL INSURANCE COMPANY
Licensed in 2006 Licensed in 2016 Grand pension PLAZA, Po Box 82 Kigali, Nyarugenge-Kigali. P.O. Box: 175 Kigali. Plot No1380, KN 4. Tel: (250) 788 143 000 ; Fax: Telephone: +250252570331/2, Fax: +250252570332 252 575 504 or (250) 252 573 461 E-mail: [email protected] E-mail: [email protected] ; Website: www.bkgi.rw Website: www.mua.rw 6. PRIME LIFE INSURANCE LTD 12. MAYFAIR INSURANCE COMPANY
Licensed in 2012 Licensed in 2017 P.O. Box 6425 kigali, Nyarugenge. P.O. Box: 1380 Kigali – Rwanda. Telephone: +250788305084 Makuza Peace Plaza, 2nd Floor, Avenue de la Paix, Nyarugenge, Kigali City. ; Module 2: Getting familiar with the existing finance options Brainstorming Session What criteria does a FSPs use to analyze your loan?
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Module 2: Getting familiar with the existing finance options The 5 C’s - Banks analyze to approve your loan
2. 1. Capacity/ 3. 4. 5. Character Cash Capital Conditions Collateral flow
Module 2: Getting familiar with the existing finance options 1. Character
• What it is: A lender’s opinion of a borrower’s general trustworthiness, credibility and personality. • Why it matters: Banks want to lend to people who are responsible and keep commitments. • How it’s assessed: From your work experience, credit history, credentials, references, reputation and interaction with lenders. • How to master it: "Character is something you can control and promote” • Develop relationship: Make yourself someone they want to lend to
Module 2: Getting familiar with the existing finance options 2. Capacity/ Cash flow
• What it is: Your ability to repay the loan. • Why it matters: Lenders want to be assured that your business generates enough cash flow to repay the loan in full. • How it’s assessed: From financial metrics and benchmarks (debt and liquidity ratios, cash flow statements), credit score, borrowing and repayment history. • How to master it: Some online lenders may be more open to helping you finance immediate cash flow gaps. If you’re focusing on local banks, pay down debt before you apply. Also, calculate your cash flow to understand your starting point before heading to the bank.
Module 2: Getting familiar with the existing finance options 3. Capital
• What it is: The amount of money invested by the business owner or management team. • Why it matters: Banks are more willing to lend to owners who have invested some of their own money into the venture. It shows you have some “skin in the game.” • How it’s assessed: From the amount of money the borrower or management team has invested in the business. • How to master it: Most of small-business owners use personal savings to start their business. Keep a record that shows your investment in the business. • There are other ways, however, to acquire startup funding if you don’t want to take on all the risk yourself.
Module 2: Getting familiar with the existing finance options 4. Conditions
• What it is: The condition of your business — whether it is growing or faltering — as well as what you’ll use the funds for. It also considers the state of the economy, industry trends and how these factors might affect your ability to repay the loan. • Why it matters: To ensure that loans are repaid, banks want to lend to businesses operating under favourable conditions. They aim to identify risks and protect themselves accordingly. • How it’s assessed: From a review of the competitive landscape, supplier and customer relationships, and macroeconomic and industry-specific issues. • How to master it: You can’t control the economy, but you can plan ahead. Although it might seem counterintuitive, apply for a credit when your business is strong. • "Banks will always be happiest to loan you money when you don’t need it,“ • If conditions worsen, they may reduce the credit line or take it . Build reserves
Module 2: Getting familiar with the existing finance options 5. Collateral
• What it is: Assets that are used to guarantee or secure a loan. • Why it matters: Collateral is a backup source if the borrower cannot repay a loan. • How it’s assessed: From hard assets such as real estate and equipment; working capital, such as accounts receivable and inventory; and a borrower’s home that also can be counted as collateral. • How to master it: Picking the right business structure can help protect your personal assets from being seized by a lender if you’re sued or if a lender is trying to collect. Forming a legal entity helps mitigate that risk.
Module 2: Getting familiar with the existing finance options Thank you and Q&A feel free to contact me, if you have more questions on the training [email protected] [email protected] 250 788381600