MICROCAPITAL BRIEF: Nonperforming Microfinance Loans in Rwanda Drop from 12% to 8.5%

The nonperforming loan ratio of the microfinance sector in Rwanda reportedly has dropped from 12 percent as of December 2011 to 8.5 percent at the end of 2012. During the same period, total assets in the sector grew from RWF 77.4 billion (USD 127 million) to RWF 100 billion (USD 161 million), gross loans increased from RWF 40.7 billion (USD 66.7 million) to RWF 58.9 billion (USD 95 million) and total deposits grew from RWF 45.9 billion (USD 75.2 million) to RWF 54.2 billion (USD 87.4 million). Challenges reported in the sector include “drawn-out” bureaucratic procedures, illiteracy, high interest rates, high operational costs and poor marketing.

Microfinance institutions (MFIs) reportedly are attempting to meet these challenges through improved product design and boosting their capacities for loan and risk management. Rita Ngarambe, executive secretary of the 84-member Association of Microfinance Institutions in Rwanda (AMIR), reportedly stated, “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…. [I] 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.”

Reportedly, 28 percent of Rwandan adults (1.3 million people) do not have access to financial services as of April 2013.

By Nicole Boyd, Research Associate

About the Association of Microfinance Institutions of Rwanda (AMIR)
AMIR is a nonprofit organization that was established in 2007 to build the capacity of the microfinance industry in Rwanda. As of March 2011, AMIR consists of 84 members that serve poor and middle-class families throughout the country. The association is governed by a general assembly and board of directors from Rwandan microfinance institutions (MFIs). Membership to AMIR is open to all MFIs that have been registered by Rwanda’s central bank.

Sources and Additional Resources:

AllAfrica. “Rwanda: Microfinance – Non Performing Loans Dip,” http://allafrica.com/stories/201303190259.html

AllAfrica. “Rwanda Micro Finance Institutions Told to Step Up,” http://allafrica.com/stories/201304230644.html

MicroCapital. April 19, 2013, “MICROCAPITAL BRIEF: Rwandan Microfinance Institutions Call for End to ‘Double Taxation,’” https://www.microcapital.org/microcapital-brief-rwandan-microfinance-institutions-call-for-end-to-double-taxation/

MicroCapital. March 19, 2013, “MICROCAPITAL BRIEF: Rwanda’s Microfinance Growth Attributed to Both Existing Institutions, Launch of New Savings and Credit Cooperatives (SACCOs),” https://www.microcapital.org/microcapital-brief-rwandas-microfinance-growth-attributed-to-both-existing-institutions-launch-of-new-savings-and-credit-cooperatives-saccos/

MicroCapital. October 31, 2012, “MICROCAPITAL BRIEF: Finscope Rwanda Survey Indicates Rise in Rural Lending Penetration to 58%, Reaches Savings to 68%,” https://www.microcapital.org/microcapital-brief-finscope-rwanda-survey-indicates-rise-in-rural-lending-penetration-to-58-reaches-savings-to-68/

MicroCapital’s Microfinance Universe Profile: Association of Microfinance Institutions in Rwanda (AMIR) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Association+of+Microfinance+Institutions+in+Rwanda+%28AMIR%29

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