19 September 2017

Rwanda: Bank of Kigali in New Drive to Deepen Financial Inclusion

Bank of Kigali says it aims at shooting three birds with one stone through its Bigereho Na BK campaign activated three weeks ago, by, first educating Rwandans on benefits of working with banks, then entice them to open or reactivate accounts and encourage them to save regularly.

While at it, the bank will reward those who participate in the three-month campaign running up to December with prizes worth hundreds of millions of francs including motorbikes, solar panels, electronics and the grand prize, a Rwf38 million Mitsubishi canter lorry.

The expected return to investment of the campaign is at least 100,000 new retail accounts mainly Rwandans living in remote parts of the country most of whom rely on micro-finance and village saving schemes to obtain financial services.

They also hold mainstream financial services in suspicion and see them as designed for the rich. But chief commercial officer Vincent Gatete says BK is out to promote a different philosophy altogether, but to help change the perception that banks are designed for the rich.

"They say banks are designed for the rich. We are saying BK is designed to make you rich and our tagline, financially transforming lives literally means, we want to work together to create mutual wealth," says Gatete.

In Bigereho, BK is also joining a national conversation on formal financial inclusion which the Government of Rwanda wants to deepen to 80 per cent by end of 2017. Findings from the 2012 FinScope Rwanda survey revealed that 72 per cent of Rwandan adults were financially included.

However, only 42 per cent of them were formally served, just 23 percent served by commercial banks with another 33 per cent served by non-bank formal institutions and 58 per cent used informal financial mechanisms.

With just 23 per cent of the adult population working with mainstream commercial banks, this means 77 per cent of the population can tap into BK's Bigereho campaign

The education aspect of BK's Bigereho Campaign is particularly important as it addresses a key barrier that the 2012 FinScope survey pointed out as condition to meet the 2017 financial inclusion target of 80 percent.

"A significant barrier to uptake of formal financial products and services was consumers' lack of awareness or understanding of how the uptake and usage of financial products would improve their lives," the report noted.

But there are other barriers for Bank of Kigali to consider as it targets the country's unbanked population; the products should be affordable and directly address the needs of this category.

Product affordability is a key aspect because the FinScope 2012 findings also indicated that 1.4 million (56 percent) of the 2.3 million Rwandan adults who were not formally served were not likely to offer new opportunities for formal financial inclusion in the short term due to mainly income constraints.

Affordability of services

However, Bigereho is mainly asking Rwandans to open a savings account and deposit on it regularly for next three months, to stand a chance of winning various prizes. But beyond the prizes, customers who open a BK savings account also earn competitive interest, says the bank.

"A savings account is an asset to a customer because for every deposit you keep with us, we pay you interest and the longer you save the more you earn," said Gatete adding that the high demand for personal loans means that those who save enjoy a high return on their savings.

The BK Kibondo savings account is among those being promoted through the Bigereho campaign as an exciting long term saving account for children between 0-16 years. The account which attracts no monthly charges can be opened with a minimum of Rwf10,000 with the bank offering savers interest of 8 percent per annum but with a single withdraw allowed in a year.

The BK Students' Saving Account targets mainly university and high school students and is tailored to help them save money for their college upkeep, study materials and personal utilities while at school. The account which has no monthly charges can be opened with a minimum of Rwf20, 000 and earns them up to 5 percent in interest income per year. It also allows students to apply for a loan.

BK Cash-Extra Savings Account is for those who would like to make gradual savings and build deposits at their own pace. This product which earns savers 6 percent interest per annum can be opened with a minimum of Rwf50,000 and attracts no monthly charges.

BK Special Fixed Savings Accounts, on the other hand targets customers with surplus funds and wish to enjoy the comfort of assured growth for investment and future needs. With this account one can save to cover for future cash outlays like home construction, university education or retirement. The special fixed savings account is opened with a minimum of Rwf100, 000 and earns savers 7 percent interest per annum although it can be negotiated upwards depending on the amount of money being deposited.


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