The Rwandan Banker August 2016

FRW 1000 1000FRW THE

BN R RWANDAN BANKER Issue No. 27 August 2016 ISSN 2410-6844

Influence of financial Financial inclusion The real Boost your development on in Rwanda: Exchange rate savings, You Economic growth a good example of and economic too can do it inclusive policies growth

AN INSIGHT INTO RWANDA’S MONETARY POLICY

1 BNR BANK NOTES & COINS WITH LEGAL TENDER

BNR VISION & MISSION

Vision To become a world class central bank

Mission

To ensure Price Stability and a sound Financial System

CORE VALUES:

Integrity

We uphold high moral ethical and professional standards for our people, systems and data.

Accountability

We are results focused and transparent and we reward according to performance.

Mutual-respect and Team-work

We keep ourselves in high spirit, committed to each other for success.

We are mindful of our risks and we optimise our resources to achieve more with less cost: time, money, environmental and otherwise.

Effectiveness

We take more interest in the impact of our actions

2 BNR BANK NOTES & COINS WITH LEGAL TENDERThe Rwandan Banker August 2016

W 1000FR 1000FRW

BN R BNR VISION & MISSION CONTENTS EDITORIAL TEAM inside this issue OWNERSHIP: National Bank of Rwanda Vision To become a world class central bank 06 26 MANAGEMENT An insight into Rwanda’s Rswitch expanding the National Bank of Rwanda monetary policy financial services ecosystem CHIEF EDITOR Mission Prof. Thomas Kigabo Rusuhuzwa (Chief Economist To ensure Price Stability and a sound Financial System National Bank of Rwanda) 12 28 EDITOR Redressing cyber Doreen Makumi The Real Exchange rate vulnerabilities starts (Corporate Communications Expert and Economic growth with the C-Suite National Bank of Rwanda) CORE VALUES: CONTRIBUTORS: Prof. Thomas Kigabo Rusuhuzwa 14 32 (Chief Economist Integrity Boost your savings, Behind a successful leader National Bank of Rwanda) you too can do it lies a dedicated assistant…. Christian Manishimwe We uphold high moral ethical and professional standards for our people, systems and data. (Senior Economist National Bank of Rwanda)

18 34 Bruno Mwenese Accountability Financial inclusion in Redressing cyber vulnerabilities (Senior Economist Rwanda: a good example starts with the c-suite National Bank of Rwanda) –where do you stand? We are results focused and transparent and we reward according to performance. Of inclusive policies Wilson Kamali (Director Statistics National Bank of Rwanda)

Mutual-respect and Team-work

We keep ourselves in high spirit, committed to each other for success. 06 10 12 18 We are mindful of our risks and we optimise our resources to achieve more with less cost: time, Pascal Munyankindi money, environmental and otherwise. (Manager Monetary Policy 22 36 National Bank of Rwanda) Influence of financial The State of Custmer Doreen Makumi Sector development on care at BNR (Corporate Communications Expert Effectiveness Economic growth National Bank of Rwanda) Josiane Ingabire We take more interest in the impact of our actions (Personal Assistant to the Governor National Bank of Rwanda)

NDAYISENGA Simon Pierre (Ass. Off. PR and Customer Care National Bank of Rwanda) 3 The Rwandan Banker August 2016

FRW 1000 1000FRW

BN R Want to Secure your future

Invest? in Treasury Bonds. An insight into Rwanda’s monetary policy

Central banks have a crucial role to ensure economic and financial stability. They conduct monetary policy to achieve low and stable inflation. To achieve their objectives, Central banks need clear policy frameworks. The Governor of the National Bank of Rwanda, Hon. John Rwangombwa discusses the National Bank of Rwanda’s Monetary and Exchange Rate Policy for the last five years and how it has helped the Bank achieve its mandate. The Rwandan Banker August 2016

entral banks have a crucial role to ensure economic and financial Cstability. They conduct monetary policy to achieve low and stable inflation. And to achieve their objectives, Central banks need clear policy frameworks. The Governor of the Na- tional Bank of Rwanda, Hon. John Rwangombwa discusses the National Bank of Rwanda’s Monetary and Exchange Rate Policy for the last five years and how it has helped the Bank achieve its mandate.

able inflation that does not pose challenges to the private sector. It implies that the general price level of goods and services in an economy is kept at a moderate level, say for example, annual inflation of around 5% in the medium term. Q&A When inflation is too high, it Q Hon Governor, we hear cen- repos and treasury bills to mop erodes the purchasing power of tral bankers talk about the up the surplus liquidity out of economic agents as fewer goods monetary policy, what exact- the economy and vice-versa. can be purchased using the ly does this term mean and Likewise, the central bank can same amount of money than what is its role in economic increase the supply of money by before. Once prices are chang- stability? for example encouraging coming too often, households and mercial banks to extend credit firms find it hard to make prop- A Monetary policy refers to the to the private sector to finance er consumption and investment strategy or course of action tak- the economy when there is no plans. Therefore, price stability en by the central bank to regu- risk of pressures on inflation. reduces economic uncertainties late the amount of money in the and creates an enabling envi- economy normally known as ronment for economic growth to liquidity, with the objective of Q There has always been a flourish. controlling inflation and influ- consensus that the main con- encing economic growth. tribution of Central Banks Q For any central bank to ef- in Economic Management is fectively achieve its mandate, Liquidity may include credit, Price Stability. Why is price it must have instruments cash and checks, among others. stability considered a core ob- that help in the implementa- When the central bank wants jective of any Central Bank? tion of its monetary policy. to reduce inflation for example, What instruments are mostly it uses its instruments such as A Price stability in simple terms used by BNR to implement its means low, stable and predict- monetary policy?

6 The Rwandan Banker August 2016

BNR uses various instruments it changed from 8% due to the ment an accommodative mon- to achieve the targets set in the liquidity shortage that was in etary policy during the last 5 monetary policy program. These the banking sector at the time years by keeping the central instruments include open mar- due to the effects of the global bank rate (Key Repo rate) at a ket operations, BNR interven- financial crisis. low level. tion on foreign exchange market and reserve requirement. The BNR’s Monetary Policy Q In attempts to curb infla- Committee (MPC) decided to When we talk of open market tion and protecting the pur- reduce the Key Repo Rate to operations, we mean interven- chasing power of the Rwan- 6.5% in June 2014, the lowest tion on the money market to dan Franc, how does the level since November 2011. As mop up or to inject liquidity in monetary policy fare/ per- a result, economic financing by the banking system in order to form in allowing increased the banking sector improved as keep the reserve money at the output of goods and services new authorized loans increased desired level. in the economy? by 22% on annual average, total outstanding loans to the private In other words, after estimat- A The National Bank of Rwan- sector increased by 23% per an- ing the level of liquidity needed da has managed to keep infla- num while total liquidity in the in the economy (i.e. money de- tion low and stable especially economy increased at 19.2% mand), different instruments within the context of the East in the last five years. However, are used to keep money supply African sub-region. In the Jan- the global economic conditions closer to it as significant devia- uary 2012-June 2016 period, have continued to be a chal- tions between the two monetary mean headline inflation for lenge for many central banks. aggregates (money demand and Rwanda stood at 3.8% com- money supply) may be a source pared to 7.3% for Uganda, 7.1% In the Rwandan case, the con- of inflation. for Kenya, 8.6% for Tanzania tinued strengthening of the and 8.7% for Burundi. In terms USD and the decline in export In practice, BNR adjusts its Key of stability, standard deviations earnings may continue to exert Repo Rate (KRR) to signal to the show that inflation was more pressure on the FRW exchange market the desired monetary stable in Rwanda (2.0%), fol- rate and increase the exchange policy stance. Open market lowed by Kenya (3.0%), Tanza- rate pass through to domestic operations include repos or re- nia (4.5%), Uganda (5.8%) and prices. In the short run, this verse repos operations, treasury Burundi (6.1%). may call for a more prudent bills issuance, standing depos- The stability in inflation and in monetary policy to continue en- its facility, standing lending fa- the value of the FRW supported suring macroeconomic stability, cility and the discount window. economic growth as Rwanda re- keeping inflation low and stable corded real GDP growth rate av- and encouraging the banking Foreign exchange intervention eraging 8% over the last decade. sector to finance economic ac- on the other hand, is a sup- tivities. plementary instrument that The National Bank of Rwanda smoothens unexpected liquid- started implementing an accom- On the other hand, Rwanda ity fluctuations in the market. modative monetary policy since has experienced good develop- BNR intervenes in the foreign June 2013, thus contributing to ments of the financial system in exchange market in order to re- the recent good performance of the last decade such as the ex- duce the exchange rate volatil- the Rwandan economy at a time pansion of the banking sector, ity. when the global economy is fac- the development in government ing challenges. securities market that has of- The intervention in the foreign fered more alternative ways to exchange market directly af- Q Given the performance of Rwandans to save their money fects the overall liquidity in the the policy in the last 5 years, and the use of electronic pay- economy, reducing it by the going forward how does the ments evidenced by the increas- FRW amount equivalent to USD bank envision the policy will ing number of service providers sold to banks. fare in maintaining the sta- and financial touch points in bility of the economy and pro- the country. Then for the reserve require- moting growth? ments, depository institutions This progress is attributed to an (commercial banks) are obliged A Rwanda has achieved high enabling regulatory framework, to hold minimum reserves economic growth during the the development of the telecom- against their liabilities, predom- last five years, standing above munication infrastructure and inantly in the form of balances 7% per annum while annual in- new technologies especially in at the central bank. This is usu- flation has been contained be- Mobile Financial Services. BNR ally done for monetary control, low 5%. will continue to work with other liquidity management and pru- stakeholders to speed up the dential purposes. The current To continue supporting the eco- process of moving from the use reserve requirement ratio is 5% nomic financing by the banking of cash to non-cash based pay- adopted in February 2009 when sector, BNR decided to implements to increase the efficiency

7 The Rwandan Banker August 2016

of the economy and facilitate- However, the increase in the tion of the payment systems (for macroeconomic policies. export of services and other example the East Africa pay- private foreign inflows hascon- ment System. These good developments have tinued to finance the trade defi- contributed to the change in- cit. While the coverage of the Q What are some of the pro- the environment in which BNR imports of goods by exports of jected trends in the coming implements its monetary policy. goods was 23.5% on average in days that are likely to affect Thus, BNR is in the process of the last five years, it was 42.9% exchange rates especially moving from the current mon- when services are included and with the increasing popular- etary framework (monetary tar- 48.6% when cross border trade ity of the Chinese currency geting regime) to a more price is included. across the world? With the based monetary policy frame- increased level of interna- work to take into consideration To continue supporting com- tional trade, what are the these new developments. BNR mercial banks to meet the high- likely impacts on exchange plans to shift from the reserve demand for dollars and also rates? money program to the use of in- smoothen the volatility of the ex- terest rate as its operating ob- change rate, BNR sustained its A Given the growing signifi- jective by 2018 to ensure that intervention on the FX market. cance of the trade relationship resources are allocated in the BNR sales to banks increased between China and Rwanda in economy in an optimal way in by 40.8%, from USD 111.5 mil- particular, considering also that the new environment charac- lion in the first six months of the RENMINBI is becoming one terized by more financial inno- 2015 to USD 157.0 million in of the global reserves currency, vation. the same period of 2016. BNR is exploring different ways of maximizing the benefits from Q We have seen the Rwan- However, important to note is this move. dan franc depreciating a lot the fact that the current level of in these last two years. What the FRW exchange rate reflects Currently, Rwanda and China are the main causes and fundamentals in the economy have a trade agreement under what is BNR doing to curb and this is extremely important which, up to 95% of products this depreciation? in economic management. A re- originating from Rwanda and cent study by BNR staff shows exported to China come with A For more than ten years, the that the current depreciation of a duty-free treatment. Exports FRW has been stable, with an- the FRW has progressively con- to China are mainly dominated nual average depreciation below tributed to make our economy, by mining products followed by 5%, as a result of high foreign particularly the export sector hides, skins, some coffee and inflows and a comparatively more competitive. pyrethrum. moderate trade deficit. Q With the ongoing trends of Over the last four years, the In line with economic growth, regional integration, is there contribution of imports from the import bill has increased a conversation among Gover- China to total imports is 15% substantially since 2005 while nors from the East African on average per annum. The export receipts have remained region to harmonize their increasing use of the Chinese low, leading to the widening of policies? currency across the world can the trade deficit. The continued be a potential opportunity for poor performance of the global A The conversation among Rwanda’s external trade. In ad- economy has contributed to a Governors does exist through dition, with the RMB set to be widening trade deficit as export the Monetary Affairs Committee included into the IMF’s SDR earnings continued to reduce. (MAC). The protocol under the basket from 1st October 2016, EAC umbrella was established central banks and other official As a result, the FRW depreci- in 2013 by heads of states institutions are likely to include ated by 7.5% in 2015. High im- with an overall commitment this currency into their reserves port bill and demand for dollars of promoting the EAC integra- portfolios, or increase their cur- from different companies and tion and establishing the mon- rent holdings. government projects under the etary union by 2024. MAC has Public Private Partnership (PPP) so far accomplished important The National Bank of Rwanda framework which needs to mo- achievement in terms of harmo- believes that the RMB has the bilize hard currency from the nization in different areas such potential to become a global re- domestic market continued to as monetary policy framework; serve currency as its interna- put pressure on the FRW ex- macroeconomic statistics; ex- tionalization process continues. change rate in 2016. By the change rate operations; rules It is in this aspect that BNR has end of the first week of August and practices regarding the already invested a small portion 2016, the FRW had depreciated bank supervision and financial of its reserves in the RMB as a by 6.6% compared to December reporting practices as well as way of diversifying its portfolios. 2015. the modernization and integra-

8 44 44 The Rwandan Banker August 2016

Banks are the front–line troops when it comes to implementing monetary policy and because of this connection, they are the most influenced by the actions of a country’s monetary policy makers. To discuss Rwanda’s monetary policy and how it has influenced the country’s Bank- ing sector, the Chairman of Rwanda Banker’s Association, Mr. Maurice Toroitich shares his views with the Rwandan Q&A Banker. Q How would you rate the fective might not be a good An important point to also note performance of the mon- way to look at them. However, is that while BNR has been etary policy in stabilizing given the specific structure quite active in its FX market the banking sector in recent and uniqueness of our econ- interventions, I do not believe years? omy, the Open Market Opera- these interventions have been tions and FX intervention are geared to defend the value of A It is my assessment that more visible. the local currency and so re- overall, BNR’s monetary poli- alistically, the local currency cy has been quite effective in In order to manage market li- has gradually depreciated to achieving and maintaining quidity and to encourage pri- keep track of the open mar- growth and stability of the vate sector lending to support ket thus allowing the market banking sector. growth and expansion while to gradually adjust itself and maintaining inflation within fend off the potential for spi- Q Of the three monetary pol- acceptable limits, BNR has ral imported inflation. This is icy instruments used by the over the recent past main- a feat that many other central Central Bank,(open market tained a moderate stance in banks fail to achieve. operations, FX Intervention this respect. On the other and reserve requirements) hand, given the wide current Finally, since the money mar- which has been the most account deficit that we con- ket has fully recovered from impactful in the Rwandan tinue to suffer due to limited the liquidity challenges expe- banking sector and how or exports, BNR has been quite rienced nearly a decade ago, why? instrumental in using capi- BNR has maintained stability tal account reserves to sup- in the level of bank reserves A Firstly, it is important to port private sector demand to support its moderate mon- note that all the three policy for foreign exchange through etary policy stance. instruments may be used to its weekly interventions in the achieve different Monetary market thereby smoothening Q Given the performance of Policy effects and so strictly the depreciation of the local the Monetary policy imple- speaking, an argument of currency. mented by the Central Bank which has been the most ef- in the last 5 years, are

10 The Rwandan Banker August 2016 there any expectations or reduction and greater velocity While the foreign exchange projections on how the pol- of money. market in Rwanda in free, icy will fare in maintaining All these will support the de- BNR has a responsibility to the stability of the economy velopment of a modern finan- ensure fairness and stability and promoting growth of cial system that is capable of in trading process especially the banking industry? competing with the rest of the in monitoring spreads that world. banks may apply between A I believe that the underly- buying and selling rates. ing objective of any monetary Unfortunately, some of these Nonetheless, the profitabil- policy is to achieve stability, changes sometimes look like a ity of this line of business is particularly of inflation. threat to stability and control hugely dependent on trading but they are unstoppable and volumes as opposed to profit In this respect, since BNR’s so it takes courage by all stake- margins. Therefore to the ex- target inflation in the medium holders to embrace the new tent that foreign exchange term is about 5% and also way of doing things including profits made by banks in the that private sector is expected customers who should be pre- recent past seems to decline, I to grow and begin to drive a pared to transition from cash see this as a factor of the value larger part of GDP growth over to non-cash payment systems of trades available than a mar- the remaining part of Vision otherwise they will lose out on gin squeeze. 2020 objectives, then it is fea- a large market that is not cash sible to expect that BNR will driven. Q With the ongoing in- continue to maintain a bal- crease in the levels of inter- anced monetary policy stance Q From a banker’s point of national trade coupled with but retaining the flexibility to view, what is the co-relation the rise in popularity of the respond effectively to unfore- between the exchange rate Chinese currency what are seen market phenomena that policies and financial sta- some of the likely changes may have an impact on infla- bility? and impacts in exchange tion. rates? A Since the global economy is This will allow banks to con- so intertwined and there is no A Firstly, it is good to clarify tinue making internal capac- one economy that is self-suf- that Chinese currency or the ity investments and looking- ficient, then there is always a USD is all foreign exchange. with confidence to a stable positive correlation between Therefore a mere popularity of credit environment that sup- foreign exchange rate policies the Chinese RMB versus the ports expansion of credit to and financial stability.This USD does not mean that sud- the private sector. situation is more pronounced denly our foreign exchange in economies such as ours problems are resolved. How- Q From a banker’s point of with a large current account ever, to the extent that a large view, with the fast evolution deficit. Therefore how for- percentage of imports into and changes in the banking eign exchange risk exposures Rwanda are from China, then industry and financial sec- in banks or by normal com- it makes a lot of sense that tor, what are some of the mercial entities is managed Rwandan traders should be adjustments you would like is critical to avoid the market able to pay for their imports made, to facilitate the sec- turmoil that can arise in case directly using the RMB as op- tor’s growth and develop- of large exchange rate depre- posed to paying in USD with ment? ciations that are akin to our the attendant exchange costs. economies. A Technology is already dic- Having said this, availability of tating how banking is being Q Banks being stakeholders the RMB to a Rwandan trader done and will be even more in exchange rates, in what who imports goods from China so in the very near future. ways has the exchange rate requires that there has to be Bill Gates once remarked that policy had an impact in another Rwandan trader who banking will always be need- their line of business in re- has sold something to China ed, but may be not banks. cent years? and gotten paid in RMB and In this sense, I don’t expect is willing to exchange the RMB that banks in Rwanda will A It is important to note that with the Rwanda trader who be spared from this wave of banks only act as intermedi- wants to import goods from change. Our regulatory and aries in the foreign exchange China. Long story cut short risk management systems market because the main role is that unless we are able to both internally in the banks of banks is to bring together sell enough goods and servic- and also from a supervisory buyers and sellers of foreign es out into the world to obtain point of view needs to antici- exchange at a marginal profit. foreign exchange, either in pate this change and adapt USD or RMB or in any other fast so as to ensure banks In this sense, the role of banks foreign currency, the benefits ride the wave of technology is to ensure transparency and of the rise of the RMB as a ma- and reap benefits such as cost ethics in the trading process. jor trading currency may not benefit us soon.

11 The Rwandan Banker August 2016 THE REAL EXCHANGE RATE AND ECONOMIC GROWTH

Prof. Thomas Kigabo RUSUHUZWA & Christian MANISHIMWE

ost people are famil- rium of a country’s currency have a bias on education and iar with the nomi- and allocate incentives be- training, savings and invest- nal exchange rate, tween tradable and non-trad- ment, and the institutional which is the price of able sectors. capacity to assimilate and Mone currency in terms of an- generate organizational and other. It is expressed as the An economic sector is referred technological knowledge. number of units of the do- as tradable, when its products mestic currency that can pur- in terms of goods or services It is not until the theory of chase a unit of a given foreign are traded or could be traded export-led growth that the currency; such as FRW 795 internationally. real exchange rate was con- for US$ 1. In our first article sidered as important for eco- on exchange rate economics Non-tradable sector consists nomic growth. It is the suc- published in the Rwandan of locally supplied goods and cessful development of East banker issue 26, we explained services such as retail busi- Asia countries such as Japan, key concepts, determinants ness, construction, etc... Hong Kong, Singapore, South and economic implications of Korea, Taiwan and China that exchange rate. Traditionally, the real ex- drove attention on the real exchange rate has not been change rate as a development- This article extends the sto- at the center of analyses of relevant policy tool. ry and discusses the role of economic growth. The first real exchange rate economic generation of growth theo- This theory essentially put a growth. The real exchange rate ries ignored this concept, fo- light on advantages of keep- describes how much of a good cusing on the determinants ing the prices of exports high or service in one country can of savings and investments. enough to make them attrac- be traded for one of that good In this regard, looking at the tive to shift resources into or service in another country. fundamental determinants of their production. growth, economists tended to Because a country normally The real exchange rate is used has more than one partner as a tool to provide an incen- in trade, economists use the tive to shift resources into the Real Effective Exchange Rate export sector, boosting the (REER) which is the weighted sector and at the end expand- average of a country’s curren- ing the national income. This cy relative to a basket of other process has an advantage currencies of its major trade of being used without being partners adjusted for the ef- constrained by diminishing fects of inflation. returns experienced by other sectors and cannot drive down The real exchange rate is very prices due to the nature of ex- important as it can be used to ternal demand. measure the competitiveness of a country, to assess a coun- Exportable or tradable goods try’s trade capabilities and and services have an elastic underlying factors of external demand than nontradables. trade, measure the equilib- In simple terms, this means

12 The Rwandan Banker August 2016 that exportable goods and ser- Caution: Real exchange rate Development experience in vices react more on changes in cannot sustain economic countries which have achieved exchange rate than non-trad- growth itself, but an appropri- high economic growth, such able goods and services. ate real exchange rate policy as East Asia countries, evi- can be an important enabling dence that maintaining a How does it work? or facilitating condition for a competitive real exchange rate

It is very common to hear country seeking to capitalize can be critical for jump-start- people claiming that their cur- on opportunities for growth. ing growth; as it encourages rency exchange rate is over the redeployment of resources valued or undervalued. The Policies and Processes into export sector and reaping question here is the currency The real exchange rate is not immediate productivity gains. is overvalued or undervalued a policy variable per se but High levels of exchange rate with respect to what? Implic- an outcome of other policies volatility can be disruptive to itly this means that there is and processes affecting de- exports and investment. some “proper” value for ex- mand and supply. Policy mak- change rate of that currency. ers should prioritize stable Conclusion Unfortunately that proper monetary and fiscal policies, There is a consensus that“ level, called also “equilibrium intervening on the foreign ex- overvaluation of exchange rate level” is never observable. change market as needed to hurts development and this There exists some references prevent excessive volatility in merits being reflected in mac- used to define a proxy of that the nominal and not attempt roeconomic policies. In addi- equilibrium exchange rate to influence its level. This is tion, keeping real exchange such as the Purchasing Power because the appropriate real rate at competitive levels and Parity (PPP) theory or the need exchange rate is only deter- avoiding excessive volatility of balancing the current ac- mined by economic funda- facilitates efforts to capital- count of a country. mentals. Thus, the role of policy is to create an environment In this paper we don’t talk of stability. about measurements of the It is very common to hear proper exchange rate, we focus on what overvaluation or people claiming that their undervaluation means or implies when it happens. currency exchange rate is over valued or undervalued Currency overvaluation refers to a situation in which the exchange rate of a currency ex- The implication is that mon- ize on the fundamental deter- ceeds what the open market is etary policy cannot be used to minants of growth. However, willing to pay. It implies that a sustain a particular real ex- competitive real exchange country’s currency is too high change rate, other than that rate cannot sustain economic for the state of the economy. dictated by the fundamentals, growth itself. Thus, it makes a country’s in the long run. In addition, exports of goods and services there is a need to ensure that An appropriate real exchange more expensive and imports fiscal policy is not deviating rate policy can be an impor- cheaper. Currency overvalu- “the exchange rate from its tant enabling or facilitating ation may be detrimental to competitive level. condition for a country seek- international trade as it tends For example, pressure of pub- ing to capitalize on opportuni- to depress domestic demand lic spending can cause the real ties for growth. and encourage spending on exchange rate to become over- imports. Contrary, underval- valued by shifting resources Since a competitive real ex- ued currency reduces spend- into the production of non- change rate as well as limiting ing on imports as they be- tradable goods while relatively volatility facilitates to sustain come expensive and increase restrictive fiscal policy tends economic growth, then the demand for domestically pro- to maintain a competitive real case for doing so will become duced goods and services. exchange rate and encourage less compelling once a coun- exported led growth. try experiences successful Thus, it is an incentive for economic growth and devel- the economy to produce Keeping real exchange rate at opment. Indeed, the benefits more which boosts econom- competitive levels and avoid- of export led growth are mac- ic growth. It also makes the ing excessive volatility facili- roeconomic: avoidance of an export sector of the country tates efforts to capitalize on acceleration of growth being more competitive, because ex- the fundamental determi- self-defeating. ports become cheaper. nants of growth.

13 The Rwandan Banker August 2016

Boost your s, You too can do it!

sector network through the means that some people do opening of new bank agen- save because they want to cies and branches and the secure their future needs us- introduction of agent banking ing the current income. Oth- system. A roadmap and task- ers may save because they force for financial education want to get interests and be were initiated and all these able to improve their life in efforts provided noticeable re- the future. Some people save sults. because they do not want to depend on others. However, the saving rate in Rwanda is still low, domesti- Saving may also stem from cally sourced capital is limited the business instinct; sav- and most of the time available ing allows some people with for short-term. The number business acumen to carry out of people with bank accounts speculative or business proj- has increased so far to around ects. Good parents always 2.32 million but most of them save to be able to bequeath a are current accounts. fortune to their children. And lastly, one may want to accu- By Bruno Mwenese In this article our focus is on mulate deposits to buy hous- why don’t people save? What es, cars, and other durables conomic decision determines saving habits? this is called the “Goalmotive.” makers in Rwanda What are the opportunities and elsewhere espe- that are out there? We bear WHY IS THE SAVING cially in developing in mind that even the liter- CULTURE LOW? Ecountries always call for in- ate whose behavior is likely to creased savings necessary have an impact and propagate When you hold a genuine con- to raise capital for country- to the rest do not save. versation with people with a level investment but also at permanent or stable source individual level. In this view, WHY DO PEOPLE HAVE of income such as public ser- some policies/strategies re- TO SAVE? vants and staff of established lated to financial deepening companies, they confirm hav- and literacy were adopted and Economists do agree on mo- ing bank current accounts. efforts have been put in place tives for saving although they to increase financial deepen- may use different terminolo- This sounds like a legitimate ing - that is in terms of reach, gies. According to the famous reason not to save for them, accessibility and affordability economist Keynes, people do although there are other types - namely by the creation of save because they want to of accounts that will actually microfinance institutions, the build up a reserve against un- even pay them some interest creation of Savings and Cred- foreseen contingencies this is but we will come back to this its Cooperatives (SACCOs), called the precautionary mo- later. These people give rea- the development of the gov- tive. sons or excuses why they do ernment security market and not save. the extension of the banking The second reason is called In 2009, Kempson and Finey the life-cycle motive. This carried out a research on sav-

14 The Rwandan Banker August 2016 ing in lower-income households in UK and identified fac- Nevertheless, the recent his- tors that are similar to what tory provides evidence on how were found in other develop- the poor people do seek and ing countries. find a variety of ways of better One reason why people claim managing their money. not to save is affordability. Spending is easy and This broke out with the fa- comes naturally but sav- mous story of the Grameen They say not to earn enough ing is a habit that you Bank institutionalizing the to save or that living expenses micro lending to disadvan- are too high for them to put need to build, start now taged people (although it in- aside some money. For others, “ formally existed before in their income fluctuate too of- many parts of the world) and ten or do frequently have un- different factors that foster the subsequent movement of foreseen expenses that hinder its development in a person. creation of more organized their ability to save. However, Policy makers can address or saving groups. it is likely more of a money tackle some of the factors that management problem than af- are macroeconomic or policy- This enlightened the thinking fordability. oriented such as the develop- on how poor people organize ment of the financial sector or their lives and all they lack is The latter comes first among financial education. a formal institution that can these reasons although it can- accept to work with whatever not fully explain why one does Other factors come from so- they can save. not save more as it is given by cietal norms and values or all categories of people even demography and can be over- In Rwanda, we have good high earners. come from individual inner examples of saving groups drive. Some of these factors which show how the poor can Unforeseen expenses do not pertain among others to fam- save. One interesting case is also justify why you should ily size, the bringing-up, deep the CIC Ltd (Circle Investment not save; it should rather be a sense of social assistance and Cooperative). strong reason to increase one gender. savings. Indeed, if you know It started as a small saving that you quite often meet im- CAN THE POOR ALSO SAVE? group of 15 students at the promptu events calling for University Libre de Kigali in money, the best option is to Affirmative! There is a think- 2012 saving just a 100FRW save more to be able to face ing that the poor cannot save per day to cater for some chal- them. The same should be the because he/she struggles to lenges in their daily lives. behavior of people with fluctu- have what to eat and cannot ating income. even get enough, so how can They developed the saving cul- he/she forego some money for ture and propagate it to other For others, there is always the sake of saving! But sav- students and with a clear goal something else they want; ing is not the exclusivity of the and commitment the saving buy new clothes, a car or up- rich! Indeed, poor people face group grew up into a recog- grade their lifestyle. Some of a lot of challenges because nized microfinance institution these stuff may be important the formal banks and other fi- with around 150 million FRW but not necessary. The habit nancial institutions are rarely of a non-saver is to prioritize willing if not at all to cater for spending over saving and en- their financial needs. joy the present and this may be related to how they see the future. Indeed, the problem is that some do not think about their future at a long horizon.

Some people will acknowledge economic illiteracy but others simply say that it is not worth it. Most of the researchers and practitioners alike agree that saving is a habit and there are

15 The Rwandan Banker August 2016

and a thousand members.

The students graduated, some got jobs in their CIC and can get loans.

SEIZE THE OPPORTUNITY!

In Rwanda there are different opportunities that can help each person in every wealth strata to increase her savings.

Commercial banks in Rwanda open free saving account and pay an interest on money in those accounts no matter how little. On one hand, for some people, they would argue why bother with such little earnings people and more efforts are yet Rwanda they are for 91 days, paid on a saving account! to reap the maximum from it. 182 days and for 364 days) issue by a central bank for However, for rich people or For quite some years now, the regulating money supply and people who witnessed how bonds market in Rwanda is raising funds for the fiscal pur- one moves from being poor to growing offering other opportu- poses via open market opera- getting rich, it is worth every nities for people’s investment tions. penny! As one of my professor portfolio management. Bonds used to say, ten FRW will al- are risk free assets and with A treasury bill is also another ways be greater than zero. the ongoing developments on risk free asset, in Rwanda open the secondly market they are to public and can allow to save However, on the other hand becoming more liquid; that is, even starting at a hundred these products are not quite it is becoming much easier to thousand Rwandan Francs well advertised and some peo- resell your bond; meaning you (100,000 FRW) . A treasury bill ple confess to not being aware can easily convert them into is liquid as well. If you need of their existence and for oth- cash. your money before the matu- ers, they do not really under- rity, you can always go for it stand their advantages. Furthermore, a bond repre- anytime. sents an investment opportu- Embrace the technology! One nity for medium term but also DIFFERENT STAKE HOLDRS’ of the ways that can help or for long term as it continues to ROLES prompt one to save is avoiding provide a predictable stream holding cash. With the advent of income. It is important here The BNR - In its mandate of of mobile money, there is a pos- to demystify that bonds are for regulating and supervising fi- sibility of keeping your money the rich. In all countries, bond nancial institutions in Rwan- on your telephone and save it are open to everyone and low da, the BNR ensures that peo- with your bank without going income earners can partici- ple’s savings are safe and well anywhere. This technological pate. For instance, the share managed. facility also helps people save of retail investors in the last 15 time they used to waste going year bond in Rwanda was 15%. This is an important task to to bank offices. build the trust of the people in The participation of banks have the financial institutions of the The facility can be and is also declined from 90.9% in 2010 country; incidentally in some used by saving groups which to 44.4% in June 2016 as that countries one of the causes of represent another opportunity of other non-bank institutions low savings within the finan- for poor to save and start work- shot up to 55.6% from 9.1% in cial system is that people do ing with formal financial insti- the same period.Though it is a not have the confidence in the tutions. Indeed, a saving group noteworthy progress, it is still management of the financial opens a saving account and at a low level. institutions. members deposit their saving The treasury bills offer another contributions through mobile way of saving. In Rwanda people continue money. showing trust in the effective- However, this product is not Treasury bills are short-term ness of the financial institu- well spread across banks and maturity promissory note (in

16 The Rwandan Banker August 2016

tions’ management by open- Rwanda has already embarked ing new accounts of around on a similar path. In addition 40 thousands in one year from to programs that are already June 2015 to June 2016. on track such as the financial education program and allow- In addition, the amount of ing the private sector to buy money people choose to keep government securities, the gov- in the banking system also ernment of Rwanda launched went up as the currency out of in July 2016 a national invest- the banking system continue ment trust (RNIT) which allow to reduce from 27.3% in 2008, to invest starting from only 14.6% in 2010 to 9% of M3 in 2000 Franc Rwandais, open to 2016. everyone and risk free.

The BNR is also a major stake- Financial Institutions holder in the financial literacy program in the country. This is Savings is the centerpiece of a program that is meant to im- the financial institutions busi- prove the financial awareness ness. They have extended and and knowledge of the popula- are still extending their reach tion allowing them to make in- but there is still need to ad- formed financial decisions. dress the challenges of design- ing financial products that fit Apart from partaking in policy the needs and ability of the making of the program, BNR people and advertising and participates in educating the educating them about those population as well, through products. different channels such as this magazine and carry out finan- START SAVING NOW! cial awareness campaigns, it also offers opportunities for Do you need to have some- saving through treasury bills thing and you feel it is hard to and bonds. get it because you are poor? Set a goal of what you want to The government achieve. Prioritize only necessary spending and avoid the Economies that realized the superfluous. tremendous step of moving from being a developing to new Gather your peers and form industrialized countries always a saving group and put aside witnessed a vital role of gov- some money regularly. If you ernment in mobilizing domes- can afford working with a fi- tic savings for investments but nancial institution, open a sav- also for insulating the coun- ing account and commit to put tries from external shocks. in some money every month! Buy treasury bills and bonds Countries such as Singapore or invest with the Rwanda Na- recorded remarkable economic tional investment Trust. investments not only inform of foreign direct investments but Spending is easy and comes also from domestic saving. naturally but saving is a habit This was possible from the that you need to build, start facilities put in place by the now! government in channeling vol- untary private savings to government.

17 The Rwandan Banker August 2016 FINANCIAL INCLUSION IN RWANDA: A GOOD EXAMPLE OF INCLUSIVE POLICIES Why is Financial inclusion so important? By. Prof. Thomas Kigabo Rusuhuzwa & Wilson Kamali

oday financial inclu- According to the World Bank, s very low. The objective of this sion is considered an population living and working paper is to analyze key drivers important develop- in the informal economy vary of the success experience about ment priority in dif- between 50 percent and 60 per- financial inclusion in Rwanda. Tferent countries because it can cent of total world population help poor households improve and in poorer countries, the Financial inclusion in their lives and spur economic proportion can reach 80% even Rwanda, a success Story! activity. 90% in some developing countries. As in other countries, financial This is more important in de- inclusion is one of the develop- veloping countries where the In addition, globally, about half ment objectives in Rwanda that majority of poor families are in of all working-age adults are is in line with the overall objec- the informal economies, rely- excluded from formal financial tive of transforming the country ing on what is called informal services and for the lowest in- into a middle income country by finances (Saving and borrowing come quintile, 77 percent are implementing and sustaining in informal ways such as fam- excluded. Thus, the develop- inclusive development. ily and friends, rotating savings ment of an inclusive financial schemes, the money lender, system is very important to The Government set clear ob- money under the mattress, etc). provide to these poor families jectives: 80% of adult finan- a broad range of financial ser- cially included by 2018 and These informal finances are in- vices. 90% by 2020. According to the sufficient compared to needs recent FinScope survey (2016), of the population and they are However, while many countries the 2017/2018 target has been unreliable and can be very ex- have adopted financial inclu- surpassed as 89% of adults pensive compared to formal fi- sion as a development objective, have access to financial servic- nances. recent numbers show that in es in 2016 almost achieving the many developing countries the 2020 target, from 72% in 2012 level of access to finance remain and only 48% in 2008.

Chart 1: Financial Inclusion: overall- according to Finscope survey (2016)

2016

18 The Rwandan Banker August 2016

Chart 2

But, what drives this big achievement? nomic policies, adjust them to nance, both formal (21.1%) and As indicated, this paper ana- changing conditions and the informal (26.4%) and the dis- lyzes key drivers of the success creation of good institutions tance to financial institutions experience about financial -in with some degree of predictabil- was cited as one of the key bar- clusion in Rwanda. ity, structures that keep leaders riers to financial access. focusing on the long term well- Our belief is that formulation being of the population. Based on the findings of the sur- and implementation of inclu- vey, the Government of Rwanda sive policies was key in the ac- Formulation and adaption of decided to put in place different celeration of financial inclusion economic policies is about how strategies to accelerate the fi- in Rwanda. leaders are able to adjust strat- nancial inclusion program. One egies and choices to changing of the key policies was to have To formulate and successfully circumstances. at least one SACCO per sector implement inclusive policies (UMURENGE SACCO). is one of the characteristics of leadership for economic growth BRING FINANCIAL INSTITUTIONS CLOSER TO THE POPULATION and development. Today there is consensus from academia and policy makers about the role of leadership in growth and development.

While resource availability will condition the growth paradigms in any economy, initial resource endowment (geographical position, natural resources, land area, people) of country is not necessarily reflective of its future development potential .

Since the 1990s, it became in- creasingly evident that factor accumulation alone was insuf- Note that, before the introduc- ficient for sustained growth and We use the case of financial in- tion of UMURENGE SACCO that good policies and sound inclusion in Rwanda to contribute Program, 51.6% of sectors were stitutions play an equally, if not to the existing literature on the without any financial institu- more, important role in building role of policies and institutions tion. Indeed, enhancing finan- and sustaining the momentum in economic development. for growth. cial inclusion requires the policies and market problems that In 2008, the first FINSCOPE lead to financial exclusion to be One of the characteristics of survey which was conducted to addressed. good leadership for economic serve as a baseline revealed that Furthermore, in 2014, 142,000 growth and development is its only around 48% of the Rwan- people in 123 countries suggest capacity to formulate good eco- dan population had access to fi- 19 The Rwandan Banker August 2016

that policies aimed specifically banking. This has contributed mation on money management. at enhancing account penetra- to expand financial services in tion and payments can be effec- the country between 2012 and Shift to digital payments as tive, especially among the poor, 2016 as indicated in chart 2 a prerequisite to remove the women, youth and rural resi- above. “cash society based mind-set is dents (Global financial develop- important and will require con- ment report, 2014). The use of digital financial ser- solidated efforts from different vices boosted access to formal stakeholders aligned to a com- The adoption of the Financial non-bank financial services to mon goal of: consumer empow- Sector Development Program 42% in 2015 from 19% in 2012. erment, change of financial be- (FSDP II) with a big compo- For example, in 2015, 74% of haviour and financial education nent of “Action plan for finan- adults in Rwanda (2.8 millions) and literacy. cial inclusion” which details key use mobile money. actions to be undertaken by In addition, as in other coun- various stakeholders for imple- ROOM FOR POLICY tries, women have limited menting the financial inclusion ADJUSTMENT access to financial services agenda for Rwanda was also compared to men. There is a key. As mentioned, formulation and common understating that the adaption of economic policies is improvement of women and important in achieving sustain- youth financial inclusion would TECHNOLOGICAL INNOVATION able economic development. lead to significant economic It is about how leaders adjust transformation through entre- strategies and choices to chang- preneurship and job creation. ing circumstances. The improvement of women’s FinScope (2016) revealed some financial inclusion will result challenges that going forward in an improvement of women’s need to be turned into oppor- absolute and relative wellbeing tunities and further accelerate and will improve the develop- financial inclusion levels. mental prospects of the children they bear (Singer D et al, They include low levels of the 2013). use of existing facilities such as debit card and mobile money, Research by the World Bank though good progress was re- (2012) indicates that when one corded. In addition, most Rwan- takes the perspective of tele- dans lack knowledge or infor- communications enterprises; there obviously exists a poten- In addition, good business envi- tial benefit in including more ronment as well as sound regu- women in their customer base. latory framework of the banking sector facilitated the entry of re- Women make up usually over gional banks in Rwanda as well half of a country’s population; as the banking sector network the scale at which corporations extension. As a result, the level can grow to if they successfully of financial inclusion in Rwan- target women and provide ser- da increased by 24% to 72% in vices that best serve the wom- 2012 from 48% in 2008 (FIN- According to the en’s needs is reason enough. SCOPE, 2012). World Bank, popu- It is then very important that To reduce transaction costs as lation living and strategies to shift to digital pay- another barrier of financial -in ment be more inclusive, partic- clusion, digital financial ser- working in the infor- ularly addressing challenges of vices were introduced in Rwan- women and youth in accessing da, such as mobile payments, mal economy vary financial services. mobile banking and internet “ between 50 percent and 60 percent of to- 20 tal world population FIGURE 27: COMPARISON OF THE RWANDAN ACCESS STRAND WITH THAT OF OTHER AFRICAN COUNTRIES WHERE FINSCOPE SURVEYS HAVE BEEN CONDUCTED – RANKED BY FORMALLY SERVED POPULATION

Mauritius 2014 85 3 2 10

South Africa 2015 77 6 3 14

Namibia 2011 62 8 3 27

Zimbabwe 2014 30 39 8 23

Botswana 2014 50 18 8 24

Rwanda 2016 26 42 21 11

Kenya 2013 29 38 8 25

Swaziland 2014 54 10 9 27

Lesotho 2011 38 23 20 19

Tanzania 2013 14 43 16 27

Uganda 2013 20 34 31 15

Nigeria 2014 36 12 12 40 Rwanda 2012

Ghana 2010 34 7 15 44

Zambia 2015 25 13 21 41

DRC 2014 12 24 12 52

Malawi 2014 27 7 15 51

Mozambique 2014 20 4 16 60

Banked Informal only Other formal (non-bank) Excluded

43 Source: Rwanda FINSCOPE report 2016 The Rwandan Banker August 2016 Influence of financial development on Economic growth

By : Pascal Munyankindi

I. INTRODUCTION nance can provide rural house- ing economic growth. holds with the money to buy conomists confirm that fi- high-yield seeds, fertilizers, and II. Link between nancial markets are known farming equipment. Financial development to be vital for stimulating Just as importantly, access to and economic growth real economic activity. A finance confers substantial wel- Ewell-developed financial market fare gains for poorer households A financial system consists of also efficiently mobilizes savings by allowing them, among other financial institutions (e.g., com-

and channels them into invest- things, to smoothen their life- mercial banks) and financial ments, which are growth en- time consumption and deal with markets (e.g., stock and bond hancing . negative shocks. Therefore, ac- markets). At a broader level, cess to finance can contribute a robust and efficient finan-

Entrepreneurs require credit to to promote economic growth as cial system promotes growth by produce which implies that eco- well as broaden social develop- channeling resources to their nomic growth requires investment. most productive uses and foster- ments and for the realization of ing a more efficient allocation of that investment, credit services Whether financial market de- “ resources. are necessary . In addition, fi- velopment underlies Rwanda’s nancial intermediation stimu- robust economic performance A stronger and better finan- lates economic growth by im- remains a subject of debate. It cial system can also lift growth proving resource allocation and may well be the case that, in by boosting the aggregate savings rate and investment rate, speeding up the accumulation of physical capital. Financial devel- Financial development is a neces- opment also promotes growth by sary but not a sufficient condition strengthening competition and stimulating innovative activities for stimulating economic growth. that foster dynamic efficiency.

investment opportunities. Economic theory posits that Access to finance, whether addition to financial develop- overall function of a financial through mainstream financial ment, there are other structural system is to reduce information institutions or through micro- factors which are important for and transactions costs impeding finance and other specialized stimulating long-run economic economic activity.The five core institutions, can expand the growth, in which case it may be functions of a financial system opportunities for poorer house- argued that financial develop- are to (i) produce ex-ante infor- holds to engage in productive ment is a necessary but not a mation about possible invest- activities. For example, rural fi- sufficient condition for stimulat- 22 The Rwandan Banker August 2016 ments and allocate capital; (ii) A supply leading hypothesis has investment productivity and ef- monitor investments and pro- received great support as it has ficiency, thus slowing down eco- vide corporate governance after been holding for most countries. nomic growth. providing finance; (iii) facilitate Different studies were conducted the trading, diversification and based on McKinnon (1973) and Iii. Does financial de- management of risk; (iv) mo- Shaw (1973) model of finan- velopment promote bilize and pool savings; and (v) cial development appropriate to growth? ease the exchange of goods and LDCs, through which financial Evidence from rwanda services. development positively affects economic growth. Known as a Empirical evidence on the link The efficiency of a financial sys- complementarity hypothesis, the between financial development tem refers to how well a financial model is based on the positive and economic growth covers system performs the five core relationship between the real de- a variety of studies using time functions and financial develop- posit rate of interest and invest- series analyses, cross-country ment refers to an improvement ment; this is contrary to previ- growth regressions and panel in the efficiency of a financial ous thought where this link was studies. Economists , establish system. negative. The model stresses that financial development is im- the negative effects of financial portant in GDP growth because The causality effect between fi- repression on economic growth it affects investments and the nancial development and eco- which characterize developing overall cost structure of opera- nomic growth has been a con- economies. In fact, they con- tions in a country. troversial issue for several years. clude that financial repression Some economists and research- through interest rate ceilings, Others observes that financial ers have found a positive impact directed credit, exchange rate development is an engine of eco- of financial development on eco- controls, control on the finance nomic growth, providing better nomic growth. sources of banking institutions business opportunities for cus- and other forms of financial re- tomers and firms. In cross-country or geographical pression are only a recipe for the regions and income groups oth- negative real deposit rate of in- Another pool of economists show ers have found a significant -re that a higher level of financial lationship for some geographical development is positively corre- regions and none in others, es- lated to economic development. Their findings suggest that the legal environment facing banks can have a significant impact on economic growth through its effect on bank behavior.

Douglas (2003) investigated evidence of the finance growth nexus in a sample of emerging SSA countries using co-inte- pecially for developing countries. terest. gration and a vector error-cor- Even though the link/relation- This reduces the supply of loan- rection model and found that ship between financial develop- able funds and forces banking financial development and eco- ment and economic growth is ac- institutions to apply credit ra- nomic growth were linked in the cepted, the direction of causality tioning in front of excess de- long-run in seven of the eight is still under debate. In this sec- mand for loanable funds. countries and the causality test tion we review theoretical and revealed unidirectional causal- empirical literature that under- The outcome is the allocation of ity from finance to growth in lies this relationship. There are funds not based on the produc- Ghana, Nigeria, Senegal, South two key hypotheses that explain tivity of investments but on oth- Africa, Togo and Zambia. the theoretical link between fi- er factors like transaction costs For Ivory Coast and Kenya, the nancial development and eco- and apparent default risks. causality ran from growth to fi- nomic growth—supply and de- As a result, there is a tendency nance, confirming the demand mand leading hypotheses. to allocate credit to non-produc- leading hypothesis in these two tive investments which decrease

See, Douglas K (2003). The finance growth nexus: evidence from Sub-Saharan Africa. IAER 9(2):172 See also, Teame G (2002). Financial development and economic growth in Sub-Saharan African Countries: evidence from time series analysis, Morehead State University, Morehead, KY. CPS: Credit to the private sector; M3: Broad Money. 23 The Rwandan Banker August 2016

Figure 1: Some key indicators of Financial sector development in Rwanda (%) 10

Source: Monetary Policy and Research Department Source:

countries . derdeveloped, not just in terms that causality runs both ways. For the case of Rwanda, since of its small size in relation to This confirms the existence of 2000 different reforms have GDP but also in terms of its lack a nexus between financial sec- been implemented in the finan- of diversity. tor development and economic cial system with the objective Analyzing the links between growth in Rwanda and the role of encouraging competition, in- a number of relevant finan- of BNR in the economic devel- creasing domestic resource mo- cial indicators and economic opment of the country in the pe- bilization, enhancing operation- growth in Rwanda over the period under review. al efficiency and ensuring the riod 2006Q1–2014Q4, we have stability of the financial system. employed a triangulation of the These results are confirmed by Vector Error Correction Model an impulse response. This anal- These reforms have generated (VECM) and Granger non-cau- ysis shows a big lag in monetary positive results in many impor- sality approaches and impulse transmission mechanism, call- tant respects, including in par- response functions to investi- ing for a more forward-looking ticular, a rapid expansion of the gate the dynamic inter-relation- monetary policy framework. banking system (financial deep- ship between various measures ening) and an even faster ex- of financial sector development IV. CONCLUSION pansion of bank lending to the and economic growth and for private sector. addressing questions of the di- Financial development has a rection of causality between fi- positive and significant effect on The ratio of broad money (M3) nancial sector development and growth in Rwanda. It is suggest- to GDP rose from 17.1% in growth in the country. ed that financial development in 2004–2005 to 25% in 2013– Rwanda will be a key ingredient 2015. Over the same period, the Empirical results suggest that for the country’s medium and ratio of private sector credit to broad money (M3)—an inter- long run growth. GDP increased from 3.5 to 16%. mediate target that Rwandan monetary authorities use in in- The obvious corollary is that Notwithstanding this remark- fluencing the level of economic policy efforts seeking to further able expansion, the financial activities in the economy has strengthen and improve Rwan- system remains relatively un- a positive and significant long- da’s financial system will yield run correlation with GDP and dividends for growth going forward.

See T. Bwire, C. Tamwesigire and P. Munyankindi in Financial Development and Economic growth nexus in Rwanda, Springer 2015

24 The Rwandan Banker August 2016 RWANDA’S BANKING

SECTOR AT A GLANCE

25 The Rwandan Banker August 2016

developed by RSwitch to facilitate integration between all financial institutions, including Rswitch expanding banks, mobile money operators, micro finance institutions and SACCOs (Savings and Credit The financial Cooperatives), to enable individuals access their e-money using their cards, mobile phones, Au- Services ecosystem tomated Teller Machines (ATMs) or online applications.

In lay man’s words, it is a meeting point for all financial e- monies, where it doesn’t matter where customers keep their money, they can always trans- fer, pay and collect electronic money with anyone else. We believe it is an important compo- nent for financial inclusion.

2) How will eHuriro benefit Rwan- da’s financial industry?

With the growing number of Banks, Micro Finance Institu- tions and Telcos, eHuriro pres- ents a number of benefits but one of the key benefits is an all- inclusive platform including all players in the financial ecosystem. By being integrated on to hile there is growth local and regional market needs the platform, financial institu- in electronic trans- of a more holistic financial ser- tions will be reducing time and actions and in- vices provider, the company’s costs for bilateral or multiple creased percentage Vision and Mission now stand integrations, increasing speed Wof broad money M3 with 27.2% as follows; to a wider market and cost ef- increase in 2015 from 16.5 fectiveness as well as better ex- in 2011, the National Bank of Vision perience for the end users. Rwanda (BNR) continues to Connecting ALL East Africans push for a cashless and harmo- with ALL their e-money. 3) RSwitch is also the driver of local nious financial services ecosys- debit card scheme SmartCash. How tem. Mission is it fairing? Expand the financial services As the national electronic pay- ecosystem by delivering in- SmartCash is RSwitch’s loc ment switch of Rwanda, driver teroperable solutions using the al debit card scheme offered to of the SmartCash brand and best capabilities and most reli- banks in Rwanda. The scheme financial solutions company, able technology. started in 2011 as one of the RSwitch has taken long strides To expound on the above, the elements to push for cashless in trying to deliver a wholesome RSwitch Chief Executive Offi- payments which are currently financial services platform to cer, Mr. Daniel Barrientos ex- growing with more debit and aid these efforts in addition to plains RSwitch’s new financial credit card schemes entering giving Rwanda’s financial ser- journey. Below in the excerpts; the market. Currently Smart- vices provider’s value-added Cash is issued by a number of 1) During last year’s Transform and professional services. local banks such as Banque- Africa, RSwitch launched a new Populaire Du Rwanda (BPR), product eHuriro. What is EHuriro? In order to expand its services I&M Bank, Urwego Opportunity beyond just a national switch Bank, Zigama, CogeBanque, and align itself to the expanding EHuriro is a product is an in- teroperable financial platform

26 The Rwandan Banker August 2016

Development Bank of Rwanda (BRD) and GT Bank.

Following industry growth fig- ures, the numbers of Smart- Cash card holders have steadily grown as well.

4) What are some of the projects RSwitch is undertaking to promote e-payments?

Over the last year, we have had a number of projects aimed at this. The bigger project was on cashless payments using SmartCash. We were able to finalize a project on enabling SmartCash cards to transact on International card processing ogy, infrastructure and upgrad- all Point of Sale (POS) terminals done locally. We are also in the ed all our system processes to across the country. This means pilot phase of becoming VISA ensure that our clients get the that all SmartCash cardholders processor, so RSwitch is able best services 24/7. can use their card on any Eq- to locally process VISA transac- uity, ECO Bank, BK and KCB tions. --- This will particularly In addition, our eHuriro plat- Point of Sale POS terminals at be great for our local banks as form can handle integration ca- any merchant location. As re- transactions will be cheaper pacity of all banks in Rwanda leased by the national bank, and quicker while having the and we have also invested in POS merchants have increased back end support team locally our staff to offer the best servic- from 38,440 in 2011 to 373,029 based. es. --- We have an around the in 2015. clock team to service our clients We are also working to strength- in turnaround times. Additionally recent statistics en our partnerships with all fi- 7) What are your thoughts on the from the National Bank also nancial institutions in the mar- growth of Rwanda’s electronic pay- show that, a lot of progress was ket through a few projects that ments? achieved in card based pay- we will be able to speak about in ment the last year with a per- the near future. centage increase in number of E- Payments in Rwanda contin- 5) With a number on debit schemes debit cards by 67.2% in 2012 to ues to grow. We are seeing how making entry into the market, what 7333.7% in 2015. customers are transacting with does this mean for RSwitch? We recently finalized this with mobile money, mobile bank- BanquePopulaire Du Rwanda ing, cards and POS and the up- (BPR) and are seeing an uptake We at RSwitch look at this as take is steadily growing. This is in the use of SmartCash cards an opportunity for synergy and generally good for the financial for payments. partnerships. As a switch we industry as we take more pay- work closely with the different ments electronically. It makes Also recently, we were awarded debitcard schemes for transac- the whole cost of doing busi- for the second year running the tion processing. ness cheaper. International Security Standard And what more debit card Certification--- Payment Card schemes in the market means We at RSwitch pledge to con- Industry Data Security Stan- is that the industry is competi- tinue supporting BNR and the dards (PCI DSS) compliance tive and vibrant. entire financial ecosystem in certification; the latest version achieving the targets for finan- 6) With the growing number of elec- of certification in East Africa. cial inclusion and a cash-less tronic transactions in the country, economy in Rwanda. is RSwitch’s infrastructure ready to Additionally, we were able to handle this? get two world class schemes This article is a republication of on board for local transaction The Service Mag – MAY 2016. processing. In May, we got ap- Over the past year we have proval to have China Union Pay heavily invested in our technol-

27 The Rwandan Banker August 2016 Redressing cyber vulnerabilities starts with the C-Suite –Where do you stand?

Doreen Makumi

igitalization has continued transforming and disrupting the world of business, Dexposing organizations to both opportunities and threats. A KPMG report on cybercrimes highlights more than 2 billion internet users and over 5 billion mobile phone connections worldwide with 294 billion emails and 5 billion phone message exchanges every day. This high internet and mobile usage has led to growth in extending financial services to people.

There has been tremendous 659.8% from 22,191,674 to innovation, improved, perfor- 168,612,455 and the num- The financial sector has in- mance and efficiency of -ser ber of agents increased by creasingly experienced cyber- vices such as online banking, 1211.7% from 3,085 to 40,467 crime instances in the past mobile payments & banking. in the period under review. few years given the shift from A case in point is Rwanda’s rudimental processes to on- internet usage and adoption Whereas technological evolu- line banking, shopping and that has incredibly increased tions have addressed some of mobile transactions, coupled with more using internet in the operational risks inher- with the increasing willing- different aspects, including ent to financial activities, es- ness of consumers to disclose financial services, business pecially in curbing operating personal information over the transactions, and data man- errors in manual and human internet out of ignorance by agement. based processes and facilitat- the users. ing delivery of services to the For instance between Decem- masses, they have rendered Today’s financial sector par- ber 2012 and December 2015, cyber-activities a source of ticularly, does not look at the number of mobile money economic growth and progress technology as an enabler accounts increased by 432% in the financial sector, trig- rather it is a business driver from 1,440,541 to 7,663,199, gering the emergence of new and this has put banks and the number of mobile money risks such as cybercrimes and other financial institutions on transactions increased by fraud. the frontline of the cyber war,

28 The Rwandan Banker August 2016 with constant attacks from hackers, internet fraudsters, organised criminal gangs to mention but a few.

ARE THE FORTUNE 500 COM- PANIES THE ONLY TARGETS?

Looking at the above statistics, one might ignorantly think that his/her small business is not a target. According to a KPMG report on cybercrimes, vulnerability to cyber threats and digital disruptions are high, with close to 50,000 victimised every hour, 820 every minute and 14 every second. Meaning that on average, a ther shows an average of 3.6 The PwC Global Economic new zero-day vulnerability successful attacks for large Crime survey 2016 states that was found every week in 2015. businesses that experienced in 2015, large businesses tar- a cyber-attack and a steady geted for attack once were most In addition, over half a billion increase in attacks in the last likely to be targeted again at personal records were stolen five years, targeting business least three times throughout or lost in 2015. The report fur- with less than 250 employees the year with spear-phishing - with 43% of all attacks tar- campaigns targeting employ- geted at small business. This ees increasing to 55% in 2015. means that today, no kind of

Still in 2015, in its 2016 Inter- business or better said, no net Security Report, Symantec sector is prone to cybercrimes. Big or small, you still can be discovered more than 430 mil- A lack of cyber-readiness lion new unique pieces of mal- basics can“ leave the cyber a target ware, up by 36 percent from security door ajar“ for the year before. intruders Financial sector – David Burg, PwC The same report recorded the – how safe is it? number of zero-day vulnerabilities doubling to 54, a 124% Financial institutions more increase in 2015 from the year than anything know that cy- before. bercrimes are real and can have severe implications to their business if not properly managed; the reason why cyber and data security remain a priority issue for banks since criminals are constantly searching for creative new ways to obtain money from banks and customers through fraud and cybersecurity vulnerabilities.

Vulnerabilities however, have increased as consumers and businesses rely more on electronic devices such as com- puters, tablets, and smart-

Source: PWC Global Crime Survey 2016 29 The Rwandan Banker August 2016

phones to bank and make ness, account for 53%. During risk based supervision for different transactions online. the first quarter of 2015, fraud banks and other financial in- According to a 2014 global recorded a loss of 174 million. stitutions, while emphasiz- statistics study by infosec pio- ing information security and neers, 45% of financial ser- data management. Awareness vices globally, suffered from Fighting cybercrimes across all financial sectors cyber-crimes, of which 40% and Police Units are conduct- were targeting only financial The right way? ed in this regard. services compared to the re- These numbers and many maining industries. more show that cybercrime is However,despite all the efforts real and we are fighting a com- being put in place, challenges In February 2015, Kaspersky mon threat. Government and still and will always prevail lab announced the greatest regulators are playing an im- given the nature of cyberspace cyber robbery that hacked portant role on how financial where it is difficult to deter- almost 100 financial institu- institutions especially banks mine political boarders and tions and stole $1billion in guard against cyber risks. culprits. In addition, as tech- just two months. Rwanda has established legal nology evolves, so does the In its Kaspersky Security and institutional frameworks cybercriminal community and Bulletin 2015 there were such as; the new penal code its technology. 1,966,324 registered notifica- that elaborates more on differ- tions about attempted mal- ent crimes including financial That said, it is important that ware infections that aimed to frauds, money laundering, fi- the sector is in position to steal money via online access nancial terrorism etc. take the responsibility of ap- preciating the fact that Cyber- security is not an “Information Technology” issue.

On the same note; - It is not a risk that can be addressed by simply having a strong IT team or IT infrastructure in place. It is not a risk that just affects a company’s technology; it affects the business itself, in every aspect, repu- tation, processes, and much more, hence the need to address this issue as a regular topic and a priority on the agenda for the board and senior management of each and every financial institution.

to bank accounts, 2.8% high- According to PwC Global Eco- er than in 2014 which was On the other hand, the Cen- nomic Crime Survey 2016, at 1,910,520. Looking at the tral bank of Rwanda has a the responsibility for cyber region, more than $245 mil- Directorate that oversees all vulnerability starts at the top lion cyber loss was reported financial institutions. yet the survey shows that top in regional financial sectors management and the board in 2014, whereas more than There is also a Financial In- are not proactive regarding $300 billion cyber loss was re- vestigation Unit in charge of cyber threats and generally do ported worldwide in the same investigating and dissemina- not understand their organ- year. tion of crimes of money laun- isation’s footprint well enough Rwanda on the other hand re- dering/cyber threats which is to properly assess the risks. corded a loss of at least Rwf hosted in the National Bank of 257 million in 2014 specifi- Rwanda premises. Board members rarely request cally in banks, due to fraud; information about their or- of which internal security The Government through the ganisation’s state of the cy- breaches and control weak- BNR has further enhanced ber-readiness yet like Jacob

30 The Rwandan Banker August 2016

Lew of the US Secretary of In a nutshell, there is need attack or breach. Cybersecu- the Treasury states, any busi- to know that now more than rity is not just about having ness leader should be in po- ever, emerging channels such the right technology, rather it sition to know how strong the as mobile and online bank- is more of having good digital organisation’s defences are, ing are opening new doors for hygiene on everyone’s part. should know if there are re- cybercriminals rendering the sponse plans in place in case financial sector a high target. According to Kaspersky, digi- a significant security breach Important to note also is that tal hygiene starts with educa- occurs, and should be get- no organisation is too small to tion and awareness on cyber- ting regular reports on cyber escape the attention of attack- security issues which is later security threats and what the ers. transferred to being digitally company is doing to respond healthy. to those threats. Sometimes the organisation might not be the ultimate tar- By being aware of just how PwC recommends that boards get but once compromised, it many risks you face, you can incorporate cybercrime into can be used as a staging point reduce them, and learn how their routine risk assess- to increase the success of an to recognize symptoms, and ments, communicate the attack against a subsequent diagnose “digital diseases” be- plan, down and across organ- target. fore they put your data, and isational lines, and discuss your customers’ data at risk. specifically with the IT depart- Therefore as much as the C- ment at what point they want Suite takes the lead, the users We should reject the misconcep- to be alerted of a breach. of internet must be aware of tion that privacy no longer exists. these cybercrime issues and Privacy is precious, and should be know what to do in case of an protected carefully – Kaspersky. SOME TYPES OF CYBER ATTACKS

VIRUSES FISCAL FRAUD PHISHING AND WORMS MALWARE

Viruses and worms By targeting official Phishing attacks are Malware is a software are computer pro- online payment chan- designed to steal a per- that takes control of any grams that affect the nels, cyber attackers son’s login and pass- individual’s computer to storage devices of a can hamper processes word. For instance, the spread a bug to other computer or network, such as tax collection phisher can access the people’s devices or so- which then replicate or make fraudulent victims’ bank accounts cial networking profiles. information without claims for benefits or assume control of Such software can also the knowledge of the their social network. be used to create a ‘bot- user. net’— a network of com- STATE CYBER puters controlled ATTACKS remotely by hackers, SCAREWARE known as ‘herders,’ — to TROJAN spread spam or viruses. Experts believe that some government agen- A Trojan is a program Using fear tactics, some cies may also be using that appears legiti- cyber criminals com- SPAM EMAILS cyber-attacks as a new mate. However, once pel users to download means of warfare. One run, it moves on to certain software. While such attack occurred in Spam emails are unso- locate password infor- such software is usu- 2010, when a computer licited emails or junk mation or makes the ally presented as an- virus called Stuxnet was newsgroup postings. system more vulnera- tivirus software, after used to carry out an in- Spam emails are sent ble to future entry. Or some time these pro- visible attack on Iran’s without the consent of a Trojan may simply grams start attacking secret nuclear program. the receiver — poten- destroy programs or the user’s system. The The virus was aimed at tially creating a wide data on the hard disk user then has to pay disabling Iran’s uranium range of problems if the criminals to remove enrichment centrifuges. they are not filtered Source : such viruses Cybercrimes- A Financial appropriately. Sector View; KPMG 31 The Rwandan Banker August 2016

Behind a Successful lead er lies a d edicated Assistant….

By: Josiane Ingabire

to the Executive in such a ship right because a bad way that he or she is able relationship could cause to more effectively perform anxiety, unhappiness, and oday business his or her job, hence creat- stress-related problems. world is charac- ing maximum productivity. terized by growing The 21st-century PA is of- Some Assistants see their pressures to meet ten the interface between position as a “Stepping Thighly sophisticated cus- the company and client; stone”. They take on the tomers’ demands, employ- the Executive and the role as a means of climbing ees’ unions requesting for board, the Executive and the corporate ladder and better working conditions the senior manager or oth- “getting in good” with the and pressure from stake- er company employees. It is top Executive. holders demanding higher a complex role and highly accountability though giv- demanding position. The “Climbers” are typi- ing the company restrained cally very career driven, en- financial resources. Executives receive a pleth- thusiastic and outspoken ora of trainings through- individuals. They do not Executives are thus feeling out their career, but few of typically consider the posi- the most burden from all these are focused on how to tion as a long-term career the above demands, while work with their assistants. choice because they will as- at the same time having This article will thus focus sume it only as a first step to deal with some other on the role of the Assistant in the course of their pro- personal matters. Luck- in this fast paced business fessional growth. ily, more than often, these environment, and provide Executives are assisted by tips and advises on how On the other hand, there Administrative Assistants, to build a cooperative and are some Assistants who Executive or Personal As- strategic relationship be- plan to take up this posi- sistants. tween the Executive and tion till the day they retire; the assistant. we call them the “Lifers”. Over the years, their role For them, being an assis- evolved from being a mere It is important to get the Ex- tant is a means to itself, Secretary to providing a ecutive–Assistant relation- as they consider it as a re- nearly “invisible” support warding experience.

32 The Rwandan Banker August 2016

Lifers don’t want to change career or company, and are not career-oriented individuals. The third and last assistant type, is called the “Partner”. Partners see the job as a long term collaboration with the Executive they as- sist and consider their ac- complishment as a mutual thing. Partner will often give his/her opinion when appropriate and is motivat- ed by the job being done.It is thus very important for the executive to be aware of these personal traits and motives of his/her as- The Driver wants facts and sistant, which will help set always go straight to the the expectations level of the point. They are very de- Executive vis-à-vis his/her cisive, impatient and de- the communication experi- assistant. manding. They love power, ence for both the Executive control and authority. and Assistant. The role of the Assistant has its own set of unique It is important to get the Executive–Assistant challenges and reward. Un- derstanding these will help relationship right because a bad relationship to further value this posi- could cause anxiety, unhappiness, and stress- tion. related problems. Assistant position may often be viewed as intimi- dating and tense. Indeed, The most useful advice to Assistants are in direct Executives and Assistants The Analyticials need data, contact with the Executive is to communicate con- data and more data; and is on a daily basis, mean- stantly with each other so very details oriented. The ing that though the Assis- that they understand what more information you pro- tant is privy to inside views each expects of the other vide them, the better. from the Executive, he or “and understand each oth- she may at time also bear er’s boundaries and ‘rules’. The Expressive is a risk the wrath of the Executive Communication, under- taker; only sees the big pic- frustration and disappoint- standing and empathy, ture and is not interested ment. The Assistant may trust are the only way to in details. The Amiables are also feel segregation from build a mutually beneficial warm, friendly, dedicated co-workers and frustration and successful relation- and cooperative. inherent to the position. ship. They are good listeners, On many occasion, the As- Indeed relationship build- team oriented and very sistant will have to play the ing is a two- way process. sensitive. role of messenger by de- It is thus also important They want results associ- livering sometime negative for the Assistant to iden- ated with low risks and feedback from the Execu- tify his/her Executive style, avoid making decisions. It tive. which can be put into four is therefore key to identify different categories: Ana- the Executive style and de- Co-workers should under- lytical, Amiable, Driver and liver information to them in stand that history always Expressive. their own style to maximize 33 The Rwandan Banker August 2016 REWARDING EXCELLENCE

taught us that we shouldn’t URGENT NOT URGENT shoot the messenger! Like- wise, colleagues may be The Governor awards tempted to come to the as- Emmanuel Ngirinshuti sistant asking to deliver an the Best Employee unpleasant information to DO IT NOW PLAN IT of the year the Executive. 2015/2016

Challenges always come IMPORTANT along with unique benefits and opportunities. Being an Assistant gives the opportunity to perform a wide range of unique and interesting tasks on a daily ba- DELEGARE DROP IT sis. NOT NOT Assistants are also in direct contact with a wide range IMPORTANT of High ranking person- alities and Top world leaders, hence enlarging his/ • The Definitive Personal her professional network. • Clearly define his/her and Secretarial hand- Working with an Execu- position in the organi- book (by Sue France) tive for a long period of time zation • Buidling a Partnership also provide the Assistant • Create standards proce- with your Boss: A take with the ability of becoming dures charge Assistant book a “Mind reader”able to pre- • Know how to prioritize (By Jerry Wisinski) dict and preempt the needs • Learn to take initiatives • The Organizer: Secrets of the Executive. and be proactive and Systems of the • Be flexible World’s Top Executive The Governor awards But how can one graduate • Create an emotional Assistants (By Anna Ca- Beatrice Numukobwa from a being Secretary to shield rin Jean) 2nd runner up actually becoming an As- • Anticipate the needs of sistant? Here are some tips Best Employee of the Executive Greatest Quotes: the Year 2015/2016 and advises to follow if one • Pay attention to details wants to create a long-term • Learn to Touch Type ( “A good assistant is your career success. type without looking at public face and representa- your fingers) tive, so their style and the • Learn about your com- • Learn to communicate way they project their im- pany business and in- clearly age needs to mirror yours in dustry The Governor awards • Focus on self-develop- terms of customer service, Wilberforce Nuwagira ment and learning of values and work ethics.” Carol Ritchie, finance di- 1st runner up Best new skills and technolo- Employee of the gies rector • Constantly seek for Year 2015/2016 feedback from your Ex- “An Executive Assistant is ecutive only as effective as the ex- • Be smart, organized and ecutive he or she assists” professional Chrissy Scivicque • If you wish to read more on this subject, you may “Success comes from hard want to read the follow- work and dedication.” ing literature: Chrissy Scivicque The Governor awards Simon Pierre Ndayisenga Customer Care Champion of the year 2015/2016 34 REWARDING EXCELLENCEThe Rwandan Banker August 2016

The Governor awards Emmanuel Ngirinshuti the Best Employee of the year 2015/2016

The Governor awards Beatrice Numukobwa 2nd runner up Best Employee of the Year 2015/2016

The Governor awards Wilberforce Nuwagira 1st runner up Best Employee of the Year 2015/2016

The Governor awards Simon Pierre Ndayisenga Customer Care Champion of the year 2015/2016 35 The Rwandan Banker August 2016

THE STATE OF

By: Simon Pierre Ndayisenga CUSTOMERAT BNR CARE

customer is the most tomers and observers alike. This should be a key strategic important visitor on There is a general concept ac- priority in the delivery of pub- our premises; he is cording to her, the “feeling of lic services considering the not dependent on us. purpose” around the custom- variations of economic times WeA are dependent on him. He er experience and a strong will ahead.One should note be- is not an interruption in our to understand customer re- yond reasonable doubt that work. He is the purpose of it. quirements and how they can being customer-centric is not He is not an outsider in our be implemented. about giving customers the business. He is part of it. We best product or service at are not doing him a favor by It is very necessary and vital whatever cost; it is about the serving him. He is doing us a for every organization whether effective and efficient delivery favor by giving us an opportu- a Public or Private organiza- of a service that is most valu- nity to do so”. ~ tion to have a customer ser- able to them, and this is very Mahatma Gandhi vice charter on whose basis important for both private and service is delivered to a client’s public organizations. At the National Bank of Rwan- satisfaction. da, customer care is very cru- cialand delivering excellent DOES IT MAKE SENSE TO HAVE A A glimpse of Customer Care customer service is the center STRONG CUSTOMER CARE IN A Culture at the Central Bank stage ofthe Bank’s corporate PUBLIC ORGANIZATION values. With the customer It is not even in one decade care culture being deeply root- ? Understanding customer that the mindset of employees ed at the Central Bank, it has needs and meeting or exceed- of National Bank of Rwanda tremendously turned it into ing their expectations is the about Customer services be- being a customer- centric or- touchstone for all successful gun to shift. ganization. service providers. Until 2009s customer care Janet LeBlanc said that Cul- concept was like unknown or ture is a key force contributing obscure subject even though to a company’s success. It is the service was rendered to also one of the most difficult clients in different domain as attributes to shape, change far as the mandate of BNR is and evolve.She went on say- concerned. ing that a customer-centric culture can be easily seen, felt and heard by employees, cus-

36 The Rwandan Banker August 2016

With the restructuring of the Bank through the systems National Bank in 2009, new and channels put in place to strategic ideas of customer let the Bank’s stakeholders care started to crop up.A new and clients provide feedback department titled “Corporate about the servicesprovided to Services” with a unit of Public them. Relations and Communication with a mandate of handling Different mechanisms have and managing customer care been installed in the National came into existence. Bank purposely to capture and register complaints from The ideas of customer service both internal and external cli- and customer care started to ents. These mechanisms in- spread across the bank but at clude; Satisfaction Surveys; tortoise step because it was Suggestion Boxes; and Cus- like a grain trying to penetrate tomer Management Systems. to the rigid ground where it re- To create and facilitate a good quires much water for smooth environment for the Bank’s operations. customers at any of its premises, the queue management Being new, it was welcomed system was designed and put The Governor awards a Customer Care with stiff resistance because in place and this has signifi- Champion at BNR some of the employees thought cantly reduced on the com- that the National Bank does- plaints related to poor client ior and character in putting not require to prioritize or em- management on queues. service above self is now em- phasize on Customer Care vis- bedded in the National Bank’s à-vis service delivery since it’s Besides the mechanisms put systems. This is evident with not a commercial bank that in place, the customer care an award dubbed “Custom- needs to attract customers. culture is now championed er Care Champion” that was and promoted through in- launched. The paradigm shift occurred house trainings targeting all when the Management of the categories of both employees All in all, customer care at the National Bank put emphasis and management of the Na- National Bank of Rwanda has on customer care and excel- tional Bank. already fixed the necessary lent quality service delivery root to lead and deliver an as a way of promotingin ref- Last but not least, a culture outstanding and World class erence to the National policy of motivating employees who service to its clientele and that was developed to improve have shown exemplary behav- stakeholders. on customer care standards in Rwanda. On an impressive note, a Cus- tomer Care Division was established in 2012 and awareness campaigns carried out across the country and in all the Central Bank’s branches. Later in 2014, the services of customer care were merged with Public Relations and this merger did not only increase the customer care services delivered but also the efficiency, expertise and ownership of the Employees at the Bank. Since then, the customer care will expanded at the National

Queue Management system at BNR

37 THE BNR BOARD, MANAGEMENT, STAFF, FRIENDS OF BNR AND FAMILIES OF The Rwandan Banker AugustTHE 2016 VICTIMS OF THE 1994 GENOCIDE AGAINST TUTSI BNR BANK NOTES & COINS WITH LEGAL TENDER DURING THE 22nd COMMEMORATION

BNR VISION & MISSION

Vision To become a world class central bank

Mission

To ensure Price Stability and a sound Financial System

CORE VALUES:

Integrity

We uphold high moral ethical and professional standards for our people, systems and data.

Accountability

We are results focused and transparent and we reward according to performance.

Mutual-respect and Team-work

We keep ourselves in high spirit, committed to each other for success.

We are mindful of our risks and we optimise our resources to achieve more with less cost: time, money, environmental and otherwise.

Effectiveness

We take more interest in the impact of our actions

38 BNR BANK NOTES & COINS WITH LEGAL TENDER

BNR VISION & MISSION

Vision To become a world class central bank

Mission

To ensure Price Stability and a sound Financial System

CORE VALUES:

Integrity

We uphold high moral ethical and professional standards for our people, systems and data.

Accountability

We are results focused and transparent and we reward according to performance.

Mutual-respect and Team-work

We keep ourselves in high spirit, committed to each other for success.

We are mindful of our risks and we optimise our resources to achieve more with less cost: time, money, environmental and otherwise.

Effectiveness

We take more interest in the impact of our actions W 1000FR 1000FRW

BN R

National Bank of Rwanda KN 6 AV.4 P.O Box 531 Kigali Rwanda Tel (+250) 788199000 Email: [email protected] Swiftcode: BNRWRWRW Twitter: @CentralBankRw

PRINTED BY:

Ltd

Dealing in trade, General supplies, Marketing and Advertising activities.

(+250) 788304929 / (+250) 788307165 Email: [email protected]