Objective : The main objective of these studies was to provide policy recommendations to the Ministry of Finance and Economic Planning (MINECOFIN) and National Bank of Rwanda (BNR) on how the financial sector and the capital market can finance more Rwanda’s economic growth. This implies to deeply analyze the Financial sector and Capital Market of Rwanda, identify key challenges, and draw best practices from other countries.

Background : Rwanda’s Vision 2050 is to become a high income country by 2050 reaching a per capita GDP of 12,476 USD in 2050 from 773 USD per capita in 2017. This requires on average a double digit growth between now and 2050. It is thus very crucial to raise more domestic financing and significantly diversify our Economy.

Challenges of financing the economy : Both external financing of the budget and growth in new authorized loans are declining. The increasing Non-Performing loans (NPLs) are source of rejection of the loans, which in turn can lead to a weaker credit demand. Compared to South Africa (70%) or Singapore (102%), Rwanda is still far in terms of Private credit to GDP ratio : 19.7%. Umurenge SACCOs also faced some challenges : only 4% of clients borrowed from SACCOs in Dec 2017, the demand for credit has been weak and NPLs have been increasing.

Research Questions

The researchers focused on the Financial Sector and the Capital Market’s challenges and give some policy recommendations :

Financial Sector challenges :

• Low Credit to private sector : is it due to a concentration of lenders ? If yes, why are banks lending to just a few companies ?
• Do banks have diversified financing instruments or products to address all needs including those of small lenders (for example in the Agriculture sector) ?
• Role and Challenges of BDF
• Microfinance institutions : which sectors are they financing ? What are the challenges and risks ?

Capital Market challenges :

• Why are there only a few companies listed ?
• Why is the secondary market not working ?
• Why are foreign investors not using the capital market ?