Members of the private sector have welcomed the entrance of Iwacu Finance, a new non-deposit lender, which was officially launched on Tuesday evening and joined the country’s fast expanding financial sector.
Iwacu Finance is a micro-lender that falls under the Non-deposit Financial Institutions category (NDFIs). It was established with the mission to help Rwandans thrive by providing quick loans in a way that is quicker than commercial banks.
Innocent Higiro (CEO of Iwacu Finance), spoke at the Onomo Hotel launch and said that people can get quick loans to help them realize their dreams without waiting.
Robert Bafakulera (chairperson of the Private Sector Federation) stated that Iwacu Finance’s entry on the market will greatly benefit the private sector, which still has huge gaps in accessing finance.
“Iwacu Finance has come to contribute to the socio-economic development of Rwandans and the country at large. We came up with the idea to establish it because we noticed there was a gap in access to finance especially among members of the business community who need quick loans,”
“You are a businessman and you want to clear your goods but you don’t have the money and you don’t have time to wait for the processes of commercial banks, we are here to fill that gap and give you the money you want in due time,” Higiro said.
Iwacu, which is licensed as a non-deposit bank by the National Bank of Rwanda, is one of the pioneers in this sector, which is dominated by MFIs and commercial banks.
According to Higiro, unlike other banks, Iwacu Finance clients don’t have to open accounts or deposit with the institution, or provide collateral. Each case is individually assessed and the money given to the client based on agreement on payment terms. The interest rate is the same as other banks.
Iwacu will issue personal loans, business loans, and agricultural loans among other products. Higiro stated that most NDFIs are foreign-owned in Rwanda and that Iwacu was one of the first Rwandan-owned NDFIs.
Robert Bafakulera was the chairperson for the Private Sector Federation (PSF), and he spoke at the launch. He said that Iwacu Finance will be a huge benefit to the private sector as it still has a lot of access to finance.
“As private sector, we are delighted to see the coming of Iwacu Finance, who bring a new product which was not heard of much in Rwanda. Business people will be accessing loans without having to go through lengthy commercial bank processes,”
“This means people will be able to access money quickly. We know most members of the business community don’t have the luxury of waiting for long for the bureaucratic processes of commercial banks. Iwacu Finance brings a quick and innovative solution to this challenge,” Bafakulera said.
The chairperson of PSF stated that Iwacu Finance not only came at the right moment, but it also provides a much-needed solution for access to finance that many businesses continue struggling with, especially after the Covid-19 epidemic.
“We encourage you to develop even more products for businesses and spread your wings in the region because that means you will facilitate business and trade in the region,” he added.
A growing financial sector
Ntoudi Mouyelo, Chief Investment Officer at Rwanda Finance, said that the launch of Iwacu Finance marks a positive milestone for Rwanda’s budding financial sector.
Mouyelo indicated that Rwanda will soon be a major financial centre not only in the region, but also on the continent. Rwanda Finance is the operator of the Kigali International Financial Centers (KIFC), which is the first financial hub in Sub-Saharan Africa.
He mentioned that Rwanda Finance wants to see more financial institutions, like Iwacu, come into the budding financial centre. It already has 40 members, all from Rwanda, Asia and Europe. These combined total over $400m.
“It is very important to see more financial institutions being born in Rwanda and we want to see more champions like Iwacu Finance boldly entering the market.
He stated that there would be more players in the market and the financial center would grow in terms its membership. This would mean that businesses would benefit directly from the pool of investment and financing opportunities available.
Mouyelo stated the private sector should take advantage of such financing options that are well regulated. This allows them to have quick access and can also help the financial institution expand. This is a win-win situation for all.
Access to finance for the unbanked: Improving access
James Rwagasana from BNR, the NDFI Supervisor at Central Bank, stated that non deposit taking financial institutions are crucial in bringing the Unbanked on board, especially those who are turned off by the bureaucratic process and other conditions of commercial banks.
“The most recent FINSCOPE study done by the Central bank shows that there are at least 23 percent of people who are unbanked but in actual sense have the capacity to be banked,”
“We believe NDFIs can play an important role in getting this percentage down. Some people want quick money to accomplish tasks without having to go through the commercial bank process and our job as the regulator we want to see this happen even on a larger scale,” Rwagasana said.
According to the BNR official regulators are responsible for protecting consumers and ensuring that institutions work profitably.
Higiro said that agricultural loans are among the products because the agriculture sector, which is of key importance to the country’s economy, faces a lot of challenges when it comes to access to finance because commercial banks don’t trust farmers.
The loans will help you purchase agricultural implements, such as machinery, storage units, and other farming resources.
“We believe Iwacu Finance will immensely contribute to the growth of the Rwandan economy, as one of the NDFI pioneers. Our aim is to serve the Rwandan community, mostly the underserved and for those business owners who need to elevate their companies to greater heights,” Higiro added.
editor@newtimesrwanda.com
Source: rnewtimes
