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Building an Inclusive Financial Sector in Rwanda (BIFSIR)

The initiative ‘Building an Inclusive Financial Sector in Rwanda supported national financial sector strategies by promoting inclusive finance. 


The initiative ‘Building an Inclusive Financial Sector in Rwanda’[1] supported national financial sector strategies and aimed to contribute to poverty reduction and to achievement of the Millennium Development Goals by promoting inclusive finance. Implemented from 2010 to 2015, its specific objective was to contribute to capacity building of the various stakeholders at the macro, meso, micro and client levels, with a view to supporting the development of sustainable, quality and diversified financial services that are accessible to less-advantaged Rwandans, both in rural and in urban areas, and to improving their economic and social status. The BIFSIR programme focused its support on vulnerable women and youth.
BIFSIR was designed based on the National Microfinance Policy Implementation Strategy (NMPIS, 2008-2012) which aimed to promote a vibrant microfinance sector offering inclusive, diversified, efficient and sustainable financial services. Specific actions were taken at each level:

  • Macro level: Support the coordination and regulatory framework of the sector, with a view to promoting financial inclusion in Rwanda;
  • Meso level: Contribute to capacity building and to the consolidation of the sector, and develop financial infrastructure in order to support the sustainability of the inclusive financial services;
  • Micro level: Support the professionalization of microfinance institutions and innovations to promote sustainable access to financial services;
  • Client level: Build the capacity of women and youth to manage MSEs and gain access to finance.

At the national level, the programme supported the improvement of the regulatory and institutional framework of the microfinance sector, strengthened sector consolidation in partnership with National Association of Microfinance Institutions in Rwanda (AMIR), and contributed to the professionalization of microfinance institutions by providing grants and capacity building training. The programme contributed to the establishment of 416 savings and credit cooperatives (SACCOs) at the Umurenge (administrative sector) level. At the client level, the programme focused on promoting entrepreneurship among youth and women in rural areas. With the Ministry of Trade and Industry, the programme provided basic vocational training and entrepreneurship training using the TVET model. It also provided business start-up toolkits to 1,500 people in nine districts: Gasabo, Kamonyi, Kicukiro, Musanze, Nyabihu, Nyamagabe, Nyarugenge, Ruhango and Rwamagana.
The major programme stakeholders were MINECOFIN, MINICOM, BNR, RCA and AMIR. The programme beneficiaries included microfinance institutions, savings and credit cooperatives, MSEs and poor and low income populations of mainly women and youth.


Key results
·         Put policies of financial inclusion into practice: BIFSIR institutionalized and operationalized Rwanda’s national financial inclusion strategies, turning policy into practice. The goals of the national strategies have reached client level, especially women and youth from rural areas, by programming client-level interventions into work plans such as financial education and engagement with financial intermediaries (e.g. microfinance institutions and SACCOs) to develop client-friendly financial products and services.  
·         Strengthened institutions through capacity building and innovations: The project contributed to the professionalization of microfinance institutions and SACCOs for financial inclusion of the poor and people living in interior areas.
·         Improved enabling environment for financial inclusion: The BIFSIR project team was housed in the MINECOFIN, directly supporting the Ministry in coordination of the Financial Sector Working Group. In this way, the financial sector benefitted from better coordination and monitoring of the planned targets of the sector strategies. The project contributed to formulation of the Financial Education Strategy and establishment of the Supervision Unit in the National Bank of Rwanda (BNR) to oversee 416 Umurenge-level SACCOs.
·         Supporting innovations to promote financial inclusion of poor: The project effectively promoted agent banking and mobile banking through selected microfinance institutions such as Urwego Opportunity Bank (UOB) and Umutangua Finance (UF). It supported UF’s innovative model of biometric agent banking, which responds to the challenges of poor literacy among adults and provides complete financial services to the poor in remote areas. Its support for the TVET model for vocational education led to training and access to credit (from SACCOs and microfinance institutions) by 1,500 youth for enterprises in saloon, carpentry, welding, masonry, automobile repair and other areas.


BISFIR provided a good scalable TVET model but internal barriers may have limited the success: Two challenges arose in regard to training. First, BIFSIR’s entrepreneurship component was not in the programme’s initial design but was later added in 2014 to support the national entrepreneurship initiative led by MINICOM, which was started with support from IFAD. After IFAD, the national initiative was implemented by AfDB and then later BIFSIR with a reduced programme duration from its original six months to three months. Trainers and trainees observed that three months is too short for youth to gain vocational skills and launch their own small businesses.
Second, changes in the training modality is another challenge. The processes of training in operation for the past six to seven years are being affected by requirements of the Rwanda Workforce Development Authority (WDA), including a potential loss in the momentum to train more youth. Before, the training was provided by locally-based Master Trainers who are established entrepreneurs in the community. Some high-performing trainees would be hired by the master trainers after completion of the training. However, the WDA requires a new modality that sends trainees to vocational training schools at district locations and also suggests that only certified Master Trainers should be used for training. The challenge arises as to how to maintain the simplicity of the existing model while ensuring easy access to training facilities and providing sufficient time to build the skills necessary for trainees to start their own business. Also, the TVET model needs to be standardized so that it will not be tinkered with to suit the requirements of donors or other agencies.


Lessons learned
·         The locally-oriented TVET model for vocational training to youth can be scaled up: The TVET model to train local youth and facilitate enterprise development is realistic and replicable. The model is based on use of proximity service providers including: (1) a local Master Trainer with his or her own business who imparts on-the-job training); (2) Business Development Advisors based at the sector location who facilitate and advise on how to develop a business proposal. The model also utilizes SACCOs and microfinance institutions (MFIs) to provide financial (credit) support. The approach facilitates better learning of not only technical skills but also business skills (as trainees have the chance to interact with clients and work in the business environment, outside of school). The TVET model is affordable and easy to operate in the local environment by local people. In relation to SMU approach, it associates well with the principle of self-help and co-operation from the local service providers.
·         Strengthening SACCOs and MFIs is the key to improving financial inclusion: Microfinance institutions focus their interventions in the most densely populated areas in towns and districts, whereas SACCOs operate from sector locations and also from some of the cells in their operational sectors. Some SACCOs face limitations of liquidity as well as difficulties in managing a large number of clients, especially when there is sudden spurt of activities due to external projects (i.e. for routing project funds with communities to pay wages or for credit support for enterprise development). Due to operational issues, some neighborhoods get limited access to financial services of SACCOs and MFIs while some are fully outreached.  In this regard, linking SACCOs in cooperative banks and computerizing transactions through standard software, a national strategy to strengthen microfinance sector will increase their operational capacity. Also, innovative solutions such as the biometric method for agent banking (piloted as part of BIFSIR by UF an MFI) have the potential to take financial services to the umudugudu (village) level at affordable cost to the rural poor.

[1] The case study is based on meetings with the BIFSIR team based at MINECOFIN and the SME sector specialist of MINICOM; a visit to field locations in Nyamagabe; discussions with MFIs, BDAs, trainee youth, SACCOs and master trainers; and a desk review of programme-related documents.


Resource Document: 
UNDP Rwanda


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