Rwanda’s journey to becoming a cashless economy is picking up albeit at a slow pace.
Dozens of point of sale machines serving around 100,000 people and a limited number of e-payment platforms have not done much to boost the ratio of digital transactions to GDP, which has jumped to just 34.6 per cent from 0.3 per cent in 2011.
The poor uptake of digital payment solutions has seen financial institutions incur more than Rwf20 billion annually in costs of handling hard cash.
These costs arise from insurance payments, cash payments and deposits at the counter.
“Our estimates show that it costs a bank between Rwf3 billion to Rwf5 billion every year to move cash,” said the chairman of Rwanda Bankers Association Maurice Toroitich.
Banks have been keen to mobilise deposits cheaply through digital platforms in a bid to boost liquidity and facilitate lending to the economy.
However, with the limited cashless payment solutions, clients have ended up losing confidence in the platforms.
Analysts blame the reluctance to take up e-payment solutions on clients feelings intimidated by the process.
“I was making an online payment with the Rwanda Revenue Authority but the system wasn’t synchronised so I was asked to provide a hard copy, which I couldn’t find,” said Jean Claude Ndibwirende, a tutor in Kigali.
To solve such problems, the National Bank of Rwanda is working on an interoperability switch system that will harmonise payment platforms.
“We have developed its structure. What remains is someone to operationalise it. By next year, it will be ready,” said John Rwangombwa, the Governor of Central Bank.
Last year, Cabinet approved the Rwanda National Payment System Strategy 2018 – 2024 to encourage the use of electronic payments.
Currently, the Central Bank says that the use of digital financial services has given rise to micro digital savings and digital loans, thereby contributing to the rise in the number of individuals accessing loans through formal financial services.
Data from the Central Bank shows that digital loans have risen by 270 per cent from a volume of 99,027 loans worth some Rwf1.9 billion in 2017, to 367,103 loans in June 2019 worth Rwf14.2 billion.