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Rugege-Ntore believes digitising financial services is an area with significant growth potential.
“Sixty-six percent of the adult population in Africa have mobile phones, 35% have formal bank accounts, and 12% have mobile money accounts. I think it is clear that people have adopted technology much faster than formal banking. And with internet and mobile penetration rates really growing very quickly, I think there is a really huge opportunity to bring the unbanked population into the formal banking sector.
“And the problem we have right now is it is very segmented. It is either telecoms companies that are offering different products, or banks offering different products, and there is really a huge opportunity to create an interoperable platform that can bring everybody online,” she explained.
In January last year, Atlas Mara, former Barclays chief executive Bob Diamond’s banking group, made a high-profile investment in Rwanda’s financial sector when it acquired a 45% stake in Banque Populaire du Rwanda (BPR). It was merged with another bank, BRD-Commercial Bank, which it bought in 2014. Atlas Mara owns a 62% stake in the new entity, trading as BPR, which is now the second-largest lender in the country.
Afrique Ramba, the chief operating officer of BPR, said the bank was previously mostly focused on retail customers, but now the new shareholders’ vision was to build a “universal” lender that would also take advantage of “corporate” opportunities.
According to the Rwanda Development Board, commercial banks are still the most important provider of financing in Rwanda. However, their activities tend to be constrained by the maturity of their liabilities, which consist mainly of local short-term deposits. It is anticipated that the presence of international banks will help introduce new capabilities, such as financing for large infrastructure schemes, advisory services for the privatisation of government projects and trade finance.
The Rwanda Development Board further highlights agricultural financing as an untapped business opportunity, and suggests that innovative products and services – such as weather-based crop insurance and warehouse receipt schemes – can be introduced to boost agricultural value chains.
Another potential growth area for banks is financing to small- and medium-sized enterprises (SMEs). The common obstacles SMEs face when it comes to accessing finance, include high bank interest rates and the need for collateral.
“I think as a bank, we need to lend to SMEs, because it is the biggest sector… If every bank is going to fight for corporates, then you are not going to do business. So, if you want to be in business, you need to lend to SMEs,” commented Ramba, acknowledging that interest rates were steep, but that this was partly because of the relatively high percentage of non-performing loans and a lack of accurate information on SMEs to inform decision-making.
It was suggested that Rwanda’s economy is too small to get major international banks interested. However, Robert Opirah, the director-general for trade and industry at the Ministry of Trade, Industry and East African Community Affairs, said banks should look beyond Rwanda’s borders and use the country as a base for pan-African operations.
“There are a lot of untapped resources in Africa. There is a need for infrastructure, there is a need for power, there is a need for everything. All that is [a] market that all these big banks should be targeting.”
“With the technology today, you don’t have to open a branch to be able to serve a client. So, you could have an office in Rwanda here as a bank, but be able to serve anybody across Africa… The opportunities are bigger than just our country,” he explained.
Light manufacturing: Import substitution
Those seeking opportunities in manufacturing need to look no further than the aisles of the Nakumatt grocery store in downtown Kigali, remarked an entrepreneur in the audience.
“When you go to that supermarket, most of the items are imported. What does that tell you? That in Rwanda we still have a number of opportunities,” she said, highlighting the manufacturing of cooking oil as a product with potential.
Rwanda is actively encouraging investment in light manufacturing and wants to increase industrial contribution to GDP to 26% by 2020.
The Rwanda Development Board has identified five specific investment opportunities in manufacturing, namely: construction materials, textiles and garments, packaging materials, soaps and detergents, and motorcycle assembly. To get manufacturers on board, the government has established four industrial parks throughout the country, as well as the Kigali SEZ that offers investors a range of financial incentives and infrastructure, such as roads and the internet.
George Ndirangu, a journalist at CNBC Africa who moderated the session, highlighted the fact that, not too long ago, Rwanda’s manufacturing sector had contracted because of high production costs and a lack of reliable electricity supply.
However, if the experiences of Jean de Dieu Kagabo – managing director of Rwanda-based packaging company Soft Packaging – are anything to go by, these challenges are being addressed. He said that over the past year, the longest his factory, which is situated in the Kigali SEZ, has been without power, was seven minutes. “We never faced a shortage of electricity for more than seven minutes. Even if there is maintenance going on, they phone us at least a day in advance… saying tomorrow at midday we are going to cut off the power, so make sure you are prepared.”
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