Global microscope on the microfinance business environment 2012

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l The government of Rwanda, known for being
very proactive, is supportive of microfi nance and
has prioritised extending access to fi nancial
services for the rural community.
l Following the collapse of several MFIs in 2006
and in the light of uncertainties among the rural
population, particularly the rural poor, regarding
the tax regime, many Rwandans are distrustful of
fi nancial institutions and are reluctant to bring
savings into the regulated economy.
l The majority of MFIs are located in urban centres
and competition in rural areas remains limited.
Key changes and impacts since last year:
l The microfi nance sector continued to expand
quickly, despite the fact that two microfi nance
banks (Agaseke and Unguka) were upgraded to full
bank status in 2011. Total deposits of the
microfi nance sector were Rwfr46.6bn (US$77.1m)
at end-2011 and the total gross loans were
Rwfr42.5bn (US$70.3m).
l The international credit card company, Visa,
partnered with the Rwandan government in 2011
to launch Branchless Solutions. It is unclear how
the mobile banking market will balance out
between the mobile-phone operators, the banks
and Visa, especially as the regulations mandate
that agents must not be exclusive and so there may
be a fi rst mover disadvantage.
l The CRB Africa, a private credit bureau launched in
March 2010, started to collect and distribute credit
data from utility companies in 2012. It also started to
distribute more than two years of historical
information, improving the credit information
system. This expansion led to Rwanda moving up in
ranking in the World Bank’s Doing Business “getting
credit” indicator in 2012, from 32 to 8.
■ Senegal
Key characteristics of the microfi nance business
environment:
l The microfi nance sector remains highly
concentrated, with 85% of lending assets held by
three major networks. Supervisory authorities’
© The Economist Intelligence Unit Limited 2012
<strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012
main focus is to manage risk in major networks
while abolishing non-regulated and weak MFIs.
This new policy is likely to lead to higher
concentration and improve supervision.
l Senegal has a set of sound laws regulating MFIs,
but there is a lack of supervisory capacity. Although
the regional central bank, Banque centrale des
Etats de l’Afrique de l’ouest (BCEAO), supervises
the larger MFIs, the national authorities’
supervisory capacity remains limited (despite
signifi cant efforts in recent years) and small MFIs
fail to comply with new regulations.
l Senegal is likely to take the lead in the region in
setting up a credit registry within the next two
years.
l Client protection rules and regulations, both in
terms of transparency in pricing and recourse
mechanisms, exist, but MFIs fail to comply and
authorities seem to tolerate non-compliance.
Existing recourse mechanisms are at odds with the
social reality of clients.
l Transaction costs are high, making it diffi cult to
extend services on a large scale, especially to
remote and rural areas. Mobile banking presents an
opportunity to reduce the costs of network
expansion. Microfi nance authorities are actively
involved in launching a mobile banking platform
for MFIs.
Key changes and impacts since last year:
l Supervisory authorities operated a signifi cant
number of licence withdrawals in 2011, as part of
its recent efforts to abolish non-regulated MFIs.
l Extensive training programmes took place to
improve understanding of new accounting chart
and internal auditing practices. This lays the basis
for tighter supervision.
l BCEAO is making progress, albeit slow, on the
credit bureau project. Harmonisation of legislation
in all member countries remains a considerable
challenge.