The following looks at Rwanda and the wider fintech and digital ecosystem of this thriving East African nation.
As highlighted in The Fintech Times‘ Fintech: Middle East and Africa 2021 report, Rwanda has made significant social and economic strides forward in its timeline, from a country once weighed down by the evils of civil war to now being described as the ‘Switzerland of Africa’.
Its recovery efforts have orientated largely around accommodating economic and political stability that is both business-friendly for locals and for foreign direct investment (FDI). For instance, the World Bank 2019 Doing Business report ranked Rwanda as the second highest country in Africa; only preceded by Mauritius.
The Rwanda Vision 2050 defines this wider economic development strategy. Similar to other schemes across the Middle East and Africa (MEA), it will help improve the standard of living for its citizens while pioneering digital transformation and a wider diverse and innovative economy.
Given that Rwanda, along with much of Africa, has had a difficult past and high poverty when compared to developed economies, there is a much more focus on improving the standard of living and alleviating poverty when compared to the Gulf Cooperation Council (GCC) region for example, where there it is more on diversifying the economy and being less reliant on oil and gas.
A noticeable milestone of 2050 is that it targets Rwanda to be a ‘globally competitive knowledge-based economy’. Importantly, aspirations can be seen as by 2050, Rwanda aspires to be a high-income country with digital technology playing a strong role in achieving that.
Over 80 per cent of Rwandan households are mobile subscribers, with less than 15 per cent of them owning smartphones. In Rwanda, the use of digital financial services by adults is estimated at almost half the population at 46 per cent. Adoption of fintech remains to be a challenge though as there was a study that almost 90 per cent in one recent study prefer to use cash.
Despite this preference, the pandemic saw digital play a vital role in Rwanda. As is the rest of East Africa in particular, mobile money is popular in the country. MTN introduced mobile money in Rwanda in 2010, followed by Tigo a year later and Airtel in 2013. At present, financial services are most commonly accessed through SACCOs and mobile money platforms.
Of the estimated 52 fintechs in the country, the top subsectors include payments and remittances at number one with 17, second place with lending/financing with 14, third place with savings and enabling processes and technologies tying with 8 fintechs each, and finally in fourth place with insurance with 5 fintechs.
With the financial services industry as a whole, the banking sector continues to be the main engine in the financial system with banks representing nearly two-thirds (66.1 per cent), followed by pensions, insurance and microfinance with 17 per cent, 9.7 per cent, and 6.4 per cent, respectively.
Examples of some of the banks in Rwanda include Commercial Bank of Rwanda, Access Bank Rwanda, Bank of Kigali and Banque Populaire du Rwanda SA (BPR). With respect to tech headlines the Startup Act Rwanda launched made headlines, which is expected to be running sometime later this year.
Earlier this year, the Rwandan government partnered with Co-creation Hub (CcHUB), Google and Mojaloop Foundation to launch the Fintech Innovation Project. As part of the initiative, Nigeria-based CcHUB will be supporting early-stage fintechs and innovators with an incubation programme.
The first and only fintech-focused Africa Fund has been launched by The Kigali International Financial Centre (KIFC) earlier this year. Valued at $50million and backed by MyGrowthFund Venture Partners, the fund hopes to facilitate homeland investment.
The fund domiciled in KIFC will create proximity on the continent between investments and fintech investment opportunities and is set to increase investment in African fintech by African firms; especially when considering how less than ten per cent of private equity investment came from the continent last year. The fund’s objective is to grow by 140 per cent.
Also, as highlighted in the Global System for Mobile Communications (GSMA) State of the Industry Report on Mobile Money 2022, MTN is designing a digital input credit product for farmers in partnership with NCBA, which is a financial services provider, with support from the GSMA AgriTech Innovation Fund. As stated in the report, through the experience of MoKash, a digital savings and instant loan product for the mass market launched in 2017, MTN and NCBA aim to become relevant to farmers through offering bundled digital financial services such as savings, short-term loans and insurance.
Finally, other initiatives that made headlines that will impact Rwanda include the launch last year of the Norrsken East Africa, whereby the Swedish co-working space and investment fund Norrsken Foundation aims to benefit entrepreneurs in its new hub in Kigali.
There was also the announcement of the Kigali Innovation City master plan. In addition, the Ministry of ICT and Innovation is finalising the development of the Tech Enabled Innovation Policy.
To note, the catalysts and wider ecosystem continue to grow with also the likes of the Rwanda Fintech Association helping further foster connections and help with wider economic development.
Rwanda is fast becoming a major regional hub which also includes fintech and wider digital. Despite its small size, its trajectory and turnover look to continue to be positive.