Rwanda: Commercial Banks Using Agency Banking to Enhance Financial Inclusion

Despite facing hurdles, especially within the rural areas, agency banking, a two year old banking concept is quickly gaining acclaim, commercial banks have said.

Maurice Toroitich, managing director of KCB Bank Rwanda which is among the four banks using the platform, in an interview last week said that in spite of the concept getting known, there still needs to be trust created between the agent and the client.

Toroitich said many people still feared to approach agency banking outlets because "they feared the agent would know how much he or she has in the account or other personal details, which is not the case."

The Kenyan commercial bank was the first to introduce the platform, which allows commercial outlets like shops and supermarkets to act in some capacity on behalf of formal banks, in the Rwandan market in 2012 and has since seen the number of outlets increase from 130 to 456 countrywide.

The service allows a client to withdraw or deposit cash, acquire and repay loans, pay bills and transfer funds.

Apart from KCB bank, Equity Bank, Bank of Kigali and Urwego Opportunity Bank are the other banks using the cost saving banking model.

Kizito Okute, in charge of agency banking at Bank of Kigali also noted that apart from the need for more customer education and sensitization in order to help change the customer's mindset and understand the benefits of agency banking, the requirements for one to become an agent were prohibitive to an extent "it's not easy to always find an existing business that meets all requirements and is also interested in offering the service."

"One of the agent approval requirements is that he or she is supposed to have operated for a minimum of 18 months and the fact that some may not be fully registered businesses or companies but meet other criteria, it's not easy to recruit agents," he explained.

Last August's monetary policy and financial stability statement indicated that there were a total of 1,161 banking agents by the end of June last year up from 844 countrywide end 2012.

The central bank continues to urge commercial banks and micro-financial institutions to use such tools to enhance financial literacy while at the same time leading to financial inclusion for all, therefore the attainment of Rwanda's Second Economic Development and Poverty Reduction Strategy (EDPRS 2).

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