The dust has settled on the
This is a continuation of such reflection.
Beyond the fete and obvious honour bestowed on
What was discussed? What were the resolutions? Why these resolutions? How do they affect you? And most importantly, is there anything that you can do to improve/achieve the resolutions? And if so; what? And most importantly, if albeit a little selfish, what is in it for you?
The first thing that comes to mind when the word 'bank' is mentioned is money. This takes the form of savings or loans that an ordinary citizen gets from there.
This facilitation can take the form of deposits, withdrawals, savings loans and transfers. That we expect this to be done with speed, efficiency and effectiveness to make our lives convenient cannot be gainsaid. Is this always the case?
Banking culture is still fairly 'alien' to us. The proportion of our population that uses banking services is still fairly low (below 30%).
This low banked population is not good for resource mobilisation. This is, perhaps, because for a long time, the banks did little to structure themselves to fully serve their potential customers.
There was too much of 'a white collar approach'. It was believed, in the financial cycles, that only working individuals and corporations make good clients.
This 'myth' has since been shattered by new banks and non-bank financial institutions and more recently mobile phone companies that have made banking services easily accessible to the sundry.
The 'white- collar-client' myth needs to be shattered more and more. For it to be effective, banking need not be elitist.
The Rwandan government, in its wisdom, decided to have Savings and Credit Cooperatives (Saccos) in every sector in order to address this issue. This has helped some, but a lot more needs to be done.
The primary purpose of commercial banks is to create credit. When banks are able to give loans, the economy gains manifold. Employees are able to build their own homes, and drive their own cars. Businesses are able to expand and so everyone does better.
But for banks to lend they must have that money from somewhere- our savings and deposits. The more the local deposits are, the more credit banks can give cheaply, and vice versa.
Unfortunately, in our case, the issue that has dogged the sector is the poor savings culture that we have. Savings comprise less than 5% of our Gross Domestic Product (our national income).
Banks are forced to seek resources from without in order to lend. Naturally, this is expensive and thus the high interest rates regime that we experience on loans.
This is something that we can and should change. We can engage in all the advocacy in this world but interest rates will still be high till cows come home.
The only effective way to bring them down is through savings mobilization (a big word that means each person needs to increase the proportion of the income they save). This is one of those facts that make good sense all round.
I am encouraged by the Saccos that are coming up. I notice that the government is considering putting the imirenge (sector) Saccos under an umbrella. Hopefully the bigger merged Saccos will be both deposit-taking and lending entities.
They will help give cheaper loans to their members. In the same vein, merry-go-rounds, investment clubs and the like should be encouraged.
There is work for everyone. The banks need to attract savings, and lend cheaply. The government needs to provide incentives and an enabling environment. The citizen needs to save and borrow more.
The rhetoric around the AfDB meet was about the
Well, the time for spanners, nuts and bolts is now. We have to put in work to realise all that glowing stuff we spoke about at the AfDB party. This, beyond, the party might be the gist of the matter.
Sam Kebongo is an entrepreneurship Development Consultant based in
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