Rwanda-Finscope-2024-Report_compressed.pdf

Type: Document | Status: ready

Rwanda FinScope Survey 2024
30 FAS by livelihoods/target groups: There is a high uptake of formal financial products and services, especially banking services among adults working in the formal sector and those running their businesses. Mobile money played a significant role in pushing the boundaries of formal financial access for adults in the of informal sector and those relying on farming. Financial exclusion is high among dependents who are likely to be economically inactive. Figure 11: Access Strand by main income generation activity (%) Banked Other Formal (non-bank) Informal ONLY Excluded 17 14 15 43 69 77 76 71 56 31 4 6 4 1 1 3 11 Farming activities Informal sector Dependents Self employed Formal sector Access strand through the provincial lenses shows that Kigali, the highly urban province, has the most financially included adults (98%), similar to 2020. The uptake of banking prod- ucts or services contributed significantly to formal financial inclusion. In the other four provinces, the uptake of other formal non-banks (mobile money and Umurenge SACCOs) has aided greatly in increasing formal financial inclusion. The Northern and Western Provinces have a slightly higher number of adults (5%) who are financially ex - cluded. Figure 12: Access Strand by Provinces (%) Banked Other Formal (non-bank) Informal ONLY Excluded Kigali City Southern Province Eastern Province Western Province Northern Province 15 17 15 15 57 75 75 75 76 41 5 5 5 5 1 5 3 5 4 1 FAS by Districts: Financial inclusion is largely driven by non-bank formal products in most of the districts except Kicukiro, Nyarugenge and Gasabo districts (from Kigali city) which are bank led. Twelve districts have higher levels of financial exclusion than the national average of 4%, especially Nyaruguru, Ngoma, Rulindo, Nyabihu and Gakenke. Reliance on exclusively informal products is highest in Gicumbi district. Rwanda FinScope Survey 2024 31 Figure 13: Financia Access Strand by districts (%) Banked Other Formal (non-bank) Informal ONLY Excluded 11 87 2 1 59 40 1 11 84 4 1 23 73 3 1 24 71 5 1 51 46 2 1 23 71 5 2 62 35 2 2 17 76 5 2 27 68 3 2 17 77 4 3 22 70 5 3 16 76 4 3 7 86 5 3 8 83 6 3 22 71 4 3 10 77 9 4 17 74 4 4 11 76 8 5 15 73 6 6 13 78 3 6 22 68 5 6 9 78 6 6 8 75 11 7 10 78 5 7 18 69 5 8 13 74 5 8 13 74 4 8 9 77 6 8 6 78 5 10 Burera Nyarugenge Nyamagabe Gatsibo Musanze Gasabo Bugesera Kicukiro Muhanga Rwamagana Nyagatare Ruhango Kamonyi Kirehe Karongi Rubavu Gisagara Nyanza Kayonza Huye Nyamasheke Rusizi Rutsiro Gicumbi Ngororero Gakenke Nyabihu Rulindo Ngoma Nyaruguru

Rwanda FinScope Survey 2024 32 FAS by country comparisons: A comparison of Rwanda’s level of financial inclusion with other selected countries where FinScope surveys have been conducted shows that: Rwanda ranks 2nd highest in terms of the proportion of financially included adults at 96%, similar to Ghana. Like Rwanda, several countries have expanded financial inclusion via non-bank (mostly driven by mobile money), reflected in the yellow highlighted sections. Ranking financial inclusion by banked population, Rwanda ranks fifth, with South Africa ranking first at 84%. Compared to other Africa countries where FinScope was conducted re- cently Rwanda has surpassed them all in the level of financial inclusion. Figure 14: Rwandan Access Strand vis-a-vis other countries Banked Other Formal (non-bank) Informal ONLY Excluded 84 30 22 44 22 14 52 18 10 14 65 70 40 54 54 12 22 39 1 1 4 5 6 13 10 21 15 2 4 4 11 19 19 26 29 36 Cameroon 2017 Burkina Faso 2016 Nigeria 2023 Uganda 2023 Tanzania 2022 Kenya 2021 Rwanda 2024 Ghana 2022 South Africa 2023

Rwanda FinScope Survey 2024
33 2.4 Summary - Financial inclusion journey The below diagram shows how financial inclusion has been progressing since 2008 when the first FinScope survey was carried out. Since 2008 there has been huge growth in in- dividuals using financial products and services including commercial banks, MFIs, SACCOs, mobile money, and informal mechanisms. As mentioned earlier, about 96% of Rwandans are financially included and 92% are formally served leaving only 4% who relies only on informal services in 2024. The gap between financial inclusion and formally served has greatly reduced over the years showing the effects of financial innovation and formal non-bank products. Figure 15: Financial inclusion journey Driving access to finance: Formally included 21% FI 48% Increased access to formal institutions Formally included 42% FI 72% Financial Inclusion through usage lenses Formally included 68% FI 89% Benefit of financial inclusion Formally included 77% FI 93% Benefits and resilience from Financial Inclusion Formally included 92% FI 96% 2008 2012 2016 2020 2024 1.8 million 3.3 million 5.2 million 6.6 million 7.9 million 2.5 Drivers of increased levels of financial inclusion This section explores the drivers behind increased financial inclusion and the extent of pen- etration and use of financial products and services through Rwandan financial institutions, including commercial banks, MFIs, SACCOs, mobile money, and informal mechanisms. 2.5.1 Drivers of the banking sector The uptake of banking products has remained consistent in 2024 (22 % in 2020 versus 22% in 2024). In absolute numbers, there has been an increase in people with bank accounts from 1.6 million to 1.8 million. An additional 10% (815,000) of Rwandans have reported hav- ing used banking services, either through over-the-counter transactions or using someone else bank account, this is down from 14% (930,000) in 2020. Figure 5 shows that among the banked, the growth in the banking sector was driven by the uptake of current transactional accounts. There has been a decline in the uptake of savings accounts. The use of digital finan- cial channels, such as bank USSD codes and mobile banking, has increased in recent years. Rwanda FinScope Survey 2024
34 Figure 16: What drives banking? (%) 22 9 17 7 8 11 5 3 10 4 2 4 2 10 22 14 15 15 11 8 7 6 3 2 2 6 10 Own bank account Uses bank services but no account (Over The Counter) Current account Savings account at a bank ATM/Debit card Mobile banking Internet banking Credit from a bank Bank USSD codes* Fixed deposit account* Overdraft facilities Credit card Mortgage E-wallet 2024 2020 2.5.2 Drivers of other formal (non-bank) products and services The uptake and usage of non-bank other formal channels/services increased from 75% (5.3 million) in 2020 to 92% (7.5 million) in 2024. The growth was driven by an uptake of products offered by formal financial institutions (excluding banks), such as mobile money operators, MFIs, and insurance companies. The changes in non-bank other formal products were driven by: Mobile money: The usage of mobile money has been the main driver of non- bank formal financial inclusion. Approximately 6.9 million (86%) adults used mo- bile money in 2024, up from 4.3 million (62%) in 2020. This includes adults using someone else’s account. Insurance: The number of adult Rwandans who are insured has doubled to 2.2 million (27%) from 1.1 million (17%) adults in 2020 driven largely by medical insurance and micro-insurance products. This could be driven by government initiatives such as the national agriculture insurance scheme that is subsidised as well as, increased uptake of different products including medical insurance, microinsurance, life insurance, and general insurance. Pension: The uptake of pension products has more than doubled to 26% (2.1 million) from 7% (504,000) in 2020. The initiative to push old age savings (Ejo Heza) has reaped positive results. Rwanda FinScope Survey 2024
35 Figure 17: What drives other formal (non-bank) products/services? (%) 92 86 28 27 26 8 75 62 36 17 7 9 Other formal (non-bank) Mobile money Umurenge SACCO Insurance Pension MFI 2024 2020 2.5.3 Drivers of informal products/services Many Rwandans continue to use informal mechanisms to manage their finances and meet some of their financial requirements, despite the increase in the uptake or usage of formal financial products. Informal groups not only offer financial services but also serve as catalysts for enhanced social capital, improved gender relations, and community/ economic devel- opment. There has been a drop in the proportion of adults using informal mechanisms from 78% (5.5million) in 2020 to 72% (5.9million) in 2024 driven by the reduced utilisation of shop credit. About 4.9 million (60%) adults in Rwanda reported that they use informal groups, such as the Village Savings and Loan Associations, mainly to save. There has been a huge drop in the uptake of credit from shops (meaning individuals who took goods in advance from the shop and paid back later), down to 15% (1.3 million) in 2024 from 33% (2.3 million) in 2020. Figure 18: What drives informal mechanism uptake? (%) 72 60 15 8 78 49 33 7 Informal Savings group Shop credit VSLAs/Community Association 2024 2020 Rwanda FinScope Survey 2024 36 2.6 Transactional accounts Access to a transactional account is a first step towards broader financial inclusion as it allows people to transact, store money, send and receive payments. In this report, transactional ac- counts are defined as those accounts offered by a bank or mobile money service provider. It enables the account holder to deposit and withdraw cash, make digital payments to third parties, and store electronic value. In addition, an account often, but not always, supports a money management objective by enabling users to keep track of money as it moves into and out of the account. Figure 19 shows that three-quarters (77%) or 6.3 million adults in Rwanda have a transaction account through either mobile money or a bank account. About 21%, or 1.7 million adults, are using both mobile money and bank accounts to manage their financial needs. This reflects that for some, mobile money is an alternative used to meet specific needs, as it does not sub- stitute bank account ownership. More than half (56% or 4.5 million) of the adults in Rwanda use mobile wallet only, demonstrating the role of mobile money in terms of increasing formal financial inclusion, especially in rural areas. Approximately 23% (1.8million) of the adult pop- ulation does not have access to either a mobile wallet or a bank account. There is a gender gap of 9%, where females with transactional accounts (either MM or bank account) sit at 73% compared to 82% of their male counterparts. Figure 19: Transaction account strand (bank and mobile wallet) Mobile money account only 56% 21% Bank account only 1% Do not have either bank or mobile money accounts 23% Those without a transactional account skew towards: Rural residents Youth aged between 16-24 years Females Dependents, adults in the informal sector and engaged in farming activities. Figure 20: Proportion of adults with no transactional account by demographics (%) 17 83 39 62 49 18 15 18 1 2 32 26 39 Formal Self employed Farming Dependents Informal Urban Rural Male Female 16-30 31-45 46-60 61+

Rwanda FinScope Survey 2024
37 3 USAGE OF FINANCIAL PRODUCTS AND SERVICES Rwanda FinScope Survey 2024
38 3.1 Banking One in three adults (31%) or 2.5 million adults, in Rwanda are using banking channels or ser - vices to manage their finances. Of the 2.5 million adults, 1.8 million (22%) have a bank account in their name or a joint account. A further 774,000 (9%) Rwandans do not have a bank account in their name but perform Over The Counter (OTC) transactions or use someone else’s bank account. Compared to 2020, there has been a decline in bank users driven by those using someone else bank account or performing OTC transactions. This decline is not surprising given the increase in the number of adults who use mobile money services, essentially ca- pable of giving users benefits like those of a bank account. Figure 21: Banking status (%) Banked Use banks (no account) Not using banking services 14 92024 2020 22 22 64 69 Uptake of banking products is driven by transaction products or channels (current or savings accounts). Table 1 shows that compared to 2020, savings via banking channels have dropped but credit and remittances have increased. Table 1: Drivers of bank usage (%) 2024 2020 Bank account holder (transactional account) 22% 22% Savings with a bank 18% 21% Credit from a bank 10% 8% Remittances via bank 4% 2% Receive income 11% 12% 3.1.1 Bank product usage Bank account use not only reflects the value of clients but also significantly, the value of the financial institution. If adults do not use the accounts they own, providers are unable to re- coup the cost of opening and maintaining these accounts. Figure 22 shows that around 54% of banked adults use their account at least monthly. There is a huge drop in adults using their bank accounts weekly (30% in 2020 vs 7% in 2024). An additional 10% used their account quarterly or at least once in three months. Compared to 2020, there has been a reduction in adults frequently using their accounts (33% use less often in 2024 versus 5% in 2020). Fur - ther analysis shows that 37% of bank users normally withdraw their money as soon as it is deposited. The reduced frequency of bank account usage and the tendency for immediate withdrawals reflect challenges for financial institutions in maintaining profitability and en- couraging deeper financial engagement among clients. Rwanda FinScope Survey 2024 39 Figure 22: Bank product use (%) Daily Weekly Monthly Quarterly Less often Do not know 2024 2020 8 39 50 7 10 33 2 15 5 30 1 Banked adults (54%) Figure 23 provides an overview of the distribution of the banked: Bank account holders skew towards: Urban residents Males Formally employed adults and self-employed adults. Aged between 25-60 years Figure 23: Distribution of the banked population – own account 40 14 27 17 18 24 69 43 14 17 15 Self employed Urban Rural Male Female Youth Seniors 31+ Formal Informal Farming Dependents 3.1.2 Barriers to banking Figure 24 reveals that lower levels of income remain the major deterrent to opening a bank account. About 83% of the unbanked population indicates that they do not need banking ser- vices due to a lack of sufficient income to justify having an account. To counter affordability barriers financial service providers could explore low-cost, no-fee accounts with flexible de- posit requirements and micro-savings and micro-loan options. Figure 24: Barriers to opening a bank account (%) 83 4.2 3 1 1.9 Insufficient income to justify it Affordability Access (banks are too far) No identification documents No product knowledge