The Exchange - East Africa's Source for Financial News The Exchange MAY 2017 - FINAL (1) | Page 17

MAY 2017
17.
Rwanda
in the flush
By Athanasius Lupatu
T
he
quarterly
Financial
Stability Committee (FSC) and
Monetary Policy Committee
(MPC) report released on March 29
indicate Rwanda’s financial sector
remains stable and sound. According
to Central Bank of Rwanda Governor,
John Rwangombwa, the country’s
financial sector has improved despite
inflationary
pressures
that
are
expected to slow down during the
course of the year.
The Central Bank estimates that
assets of the financial sector continued
to grow as it witnessed the banking
sector assets increase by 11.5 percent
year-on-year to RwF24 trillion (USD
28Bn). During the same period assets
of microfinance institutions also
increased by 6.6 percent reaching
Rwf223 billion (USD 263Ml) while
assets of the insurance and pension
sectors increased by 13.7 percent to
Rwf347 billion (USD 410Ml) and by 12.1
percent to RwF610 billion (USD 721Ml)
respectively.
According to the Central Bank,
it has observed that the sector has
remained profitable, adequately liquid
and solvent. As at the end December
2016, Central Bank data indicate the
capital adequacy ratio of banks and
microfinance sectors stood at 21.8
percent and 35.2 percent respectively,
well above the bank’s regulatory
minimum of 15 percent.
After reviewing the economic and
financial developments and outcomes
of the previous monetary policy
decisions and outlook for 2Q17, the MPC
has decided to maintain the current
policy stance. According to the report,
solvency positions of private insurers
continued to improve following
the recapitalization of previously
undercapitalized companies.
Overall, the total banking sector net
profit before tax increased from RwF57
billion (USD 67Ml) in 2015 to RwF60
billion (USD 70Ml) in 2016. In the same
period, the microfinance sector profits
increased from RwF6.8 billion (USD
8Ml) to RwF9.9 billion (USD 11Ml)
boosted by reduced operational costs
and increased fee and commission
income.
Profits in the insurance sector
increased year-over-year from RwF21.9
billion (USD 27Ml) in December 2015
to RwF24.6 billion (USD 29Ml) in
December 2016.
Governor Rwangombwa pointed out
that the Central Bank will continue to
work closely with financial institutions
to advance financial efficiency to
improve the sector’s profitability.
Rwanda’s economy is expected to
perform well in 2017 as it recorded a
5.9 percent growth in 2016. As of the
first quarter of 2017 the real composite
index of economic activities grew by
5.8 percent in the first two month of
the year and total turnover grew by
15.9 percent during the same period.
By March 2017, inflationary pressures
eased to 7.7 percent compared to
8.1 percent registered in February
although this is higher than the 4.6
percent registered during the same
period in 2016. Governor Rwangombwa
noted that inflationary pressures have
been experienced across the region
and have also been attributed to poor
performance in the agriculture sector
and increase in crude oil prices.