Wednesday, 15 February 2012

A large Commercial bank? Hop over to Rwanda

Rwanda is looking to license large commercial banks that have the financial muscle to bankroll large investment projects in the east African country. 

A good economic c performer, Rwanda's economic growth is project at 7.6 percent this year. The Governor of the central bank Governor Claver Gatete  told the press in Nairobi  that his country is eyeing banks with the financial muscle to lend Upto US$100million.

Rwanda boast of  nine commercial banks and hundreds of microfinance institutions. However, it wants  banks that can underwrite the country's economic development .

The banking industry in Rwanda was healthy, Gatete said, with the capital adequacy ratio standing at at 27 percent last year, against a statutory requirement of 15 percent. generally the operating environment is suitable.

Last year, Bank of Kigali, one of the largest banks in rwanda listed at the local Bourse. Kenya commercisl bank, one of the largest bank in kenya, was the first to list at the Kigali securities exchnage tw years ago. Now Equitybank another large Kenyan bank has been lisenced to operate in Rwanda

Gatete also said Rwanda plans to reduce loan defaults in the industry to 5 percent of total loans in the medium-term, and cut non-performing loans in the industry to under 7 percent this year from 8 percent, to ensure the sector's continued health.

Total outstanding credit by banks in the country stood at 509 billion Rwandan francs ($847 million) at the end of last year, he said.

Gatete said the main risks facing the country's projected growth of 7.6 percent this year - from a forecast 8.8 percent in 2011 - stemmed from the euro zone debt crisis.

"It all depends on external shocks. We don't know what is happening in the euro zone which is one of our big trading partner," he said.

"We don't know what factors will drive oil prices. It also depends on whether the famine in the Horn of Africa will persist."

The projected growth for this year will be driven by the agricultural sector, tourism and exports, which grew by 53 percent last year to almost $400 million, Gatete said.

"We expect significant growth this year now that the government is making it a priority to support the export market," he said.

Year-on-year inflation is projected to stay below 7.5 percent this year after hitting a high of 8.3 percent in 2011.

Gatete said the franc's exchange rate would be stable to the dollar with market forces determining the rate.

"For us, we intervene when there is any kind of shock ... we have sufficient reserves," he said, adding the central bank holds forex worth 7.7 months of import cover, way above the stautory four months.

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