East African Business Week

KIGALI, RWANDA — The era of less competition and high lending rates in Rwanda's retail banking is likely to phase out as new players prepare to join the market.
Equity Bank, one of Kenya's largest retail banks and two big Rwandan microfinance institutions now upgrading to microfinance banks are the new players joining the market soon.
The National Bank of Rwanda (NBR) says the newly licensed players are expected to ignite tough competition in the less competitive banking industry. Particularly, they are expected to push real interest rates down and give Rwandan as well as businesses more chances to access credit.
“We expect positive developments into the retail markets following the recent decision to license Equity Bank, which will start operations soon,” the BNR Governor Mr. François Kanimba told a press conference in Kigali last Wednesday.
The upgraded microfinance institutions include IMF Unguka and CSS Zigama. The two join Urwego Opportunity Bank bringing together the total number of microfinance institutions to three.
“Expanding operations of microfinance banks will open further competition in the retail markets,” said Mr. Kanimba.
Licensing new players could calm BNR's worries that the banking sector is vulnerable to systemic problems as it is dominated by four banks although there are eight commercial banks in the country.
Operations of these four banks represent 69.1% of the total deposits of the banking industry and 46.7% of loans.
“This may reduce the likelihood of banking sector problems, but it can also limit the possibility of resolving any possible systemic problem in case it arises,” warns the banking regulator.