Leapfrogging Rwanda’s digitisation process

On 29 November 2019 at 07:55

As Rwanda continues to make strides in development, technology comes at the forefront as a tool used to ease transactions and fuel economic growth. Today, customers are not required to queue to receive services or carry with them thousands of banknotes like it was before. New means of money transfer have been introduced including card transfers, Point of Sales (POS) payments, mobile phone transfers and bank to mobile transfers among others.

Apart from banks, there are other institutions in Rwanda that promote online money transfer including Airtel Rwanda, Mobicash Rwanda Ltd, MTN Rwanda RSwitch Ltd, Visa Rwanda Ltd and Bank of Kigali IKOFI.

Online money transfer made it easier to send money anywhere across the country and abroad without the need to travel or send it through the post at the risk of the money never reaching the recipient. Not only does it prevent the loss of money mid-transfer, it is also a solution to the economy of the Central Bank of Rwanda that can easily track the flow of money within the country and can cut on the expenses incurred in making new banknotes and coins that range between Rwf 1.5 billion and Rwf 2 billion every year.

The Central Bank Governor, John Rwangombwa told IGIHE that with different awareness campaigns about online money transfer, people understand more how life-changing it can be. “Online money transfer started in Rwanda earlier in 2011, but only 0.3% of the country’s economy. Today, it has skyrocketed to 34.6% and we intend to reach 80% by 2024. There is a need for a collective effort in educating people about the benefits of online money transfer and sharing that technology so that it can benefit a larger portion of the Rwandan population.”

The 2018/2019 Central Bank of Rwanda report shows that online money transfer has reached 34.63% as of July 2019 from 30% in 2018. A typical example can be observed on POS machines which use increased to 41.4% on a 10,000-population sample from 30% in 2018.

Remarkable achievements

The Central Bank of Rwanda report 2018/2019 also shows a comparison in online money transfer between July 2018 and July 2019 where the use of POS machines increased by 39% from 2198 purchased to 3046.

Virtual POSs, Near Field Communication, and Mobile POS online transfer methods, have been introduced to contributing to a 32% increase in POS machines use from 12, 959 units in July 2018 to 17,048 units in July 2019.

The number of times POS machines have been used increased by 40% reaching 2.2 million times, leading to an increase in money transfer of 18% and facilitating the transfer of up to Rwf 10 billion. The number of ATM machines increased by only 2% from 382 to 390.

The number of times ATM machines were used increased by 2% reaching 9.7 million times mainly due to the Central Bank of Rwanda and the government’s effort in promoting cashless transfers. The amount of money withdrawn on ATM machines increased by 4% reaching Rwf 551 billion.

Last year, the amount of money transferred online increased by 32% from Rwf 1563 billion to Rwf 2058 billion while the number of mobile banking users increased by 52% reaching 192,145. The number of internet banking users increased by 13% reaching 79,079 in July 2019.

The value of the money that was transferred using mobile banking increased by 46% from Rwf 43 billion in July 2018 to Rwf 63 billion, in July 2019.

Way to go

Governor Rwangombwa says there is still a long way to go in achieving total cashless transfers in Rwanda but given that a large proportion of the Rwandan population is youth, it will be easily achievable.

Using online money transfer entails a lot of benefits including safety and fewer risks of fraud and theft while it would be hard to recover physical money.

It also helps business owners to control the flow of their expenses and income, tax payment, in buying electricity and TV subscription to mention a few, from the comfort of their homes.

Among the obstacles to the completion of a cashless economy are that some mobile and online banking applications are not compatible with each other.

There is also the issue that the economy of Rwanda has built its foundation on physical money transfer that it becomes harder to change mentalities. Many business owners in rural areas are still clinging to the traditional transfer methods leading to a 1% loss in the country’s GDP. Other obstacles include that some areas of the country are off-grid or have no cell towers yet and therefore cannot use POS machines yet.

High transfer fees also figure among the issues, online money transfers face.

Governor Rwangombwa says that in 2017, MTN Rwanda introduced a new form of mobile payment where business owners acquire a number and buyers can pay through mobile money using it, with no charges whatsoever.

He added that there is hope that Rwanda will eventually reach the 80% goal in online money transfer use through continuous education and through the introduction of improved technology.