Rwanda: Microfinance - Non Performing Loans Dip
Rwanda, March, 18 2013 -
The Microfinance sector has registered a decline in Non Performing Loans indicative of an improvement.
The sector that includes microfinance institutions and the Umurenge Savings and Credit Cooperatives (Saccos), saw a reduction in their Non Performing Loans ratio from 12 percent to 8.5 percent.
"The improvement was driven by the good performance of Umurenge Saccos that recorded a NPL rate of 5.3 percent at the end of last year from 5.6 percent in 2011," said Claver Gatete, the Minister of Finance.
Sector's assets grew to Rwf 99.69b ($153.4m) at the end of last year compared to Rwf 77.42b ($119.1m) in 2011, while gross loans went up to Rwf 58.93b ($90.6m) up from Rwf 40.72 billion in 2011 with net loans growing to Rwf 56.27b ($86.7m).
" We have put in much effort to help microfinance institutions to build capacity in their management especially in loan disbursement and collection which has been a challenge of most MFIs," Rita Ngarambe, Executive Secretary of Association of Micro finance Institutions of Rwanda-AMIR told East African Business Week.
Ngarambe added that the sector was able to increase its loan portfolio by improving their lending procedures and also encouraging more people mainly in rural areas to access credit.
"Am hopeful that their portfolio will grow because of the efforts we are putting in to help these institutions to design products suitable for their clients," she stressed.
Ngarambe pointed out that the recent financial education campaigns to encourage people to save has increased the sectors' total deposits to Rwf 54.15 billion in 2012 compared to Rwf 45.85 billion realized in the previous year.
Meanwhile, the banking sector 's balance sheet has a
a positive outlook with its outstanding loans and advances reaching Rwf 747.3 billion last year up from Rwf 556.9 billion in 2011.
"During the year 2012 the banking sector remained liquid, well capitalized and profitable as a result of strengthened legal and supervisory reforms," Central Bank said in a monetary policy statement.
Experts say that the sector needs to put in more efforts to attract more deposits to increase liquidity that they can loan to the growing private sector mainly the Small and Medium enterprises-SMEs.
Currently, the banking sector's deposits stand at Rwf 844.0 billion which increased from Rwf 732.6 billion by end of 2011 registering an increment of 27.8%.