The Impact of COVID-19 on the Rwanda Banking Sector

The COVID-19 pandemic has caused an abrupt shock to the global economy and currently, there remains uncertainty around the means, speed, and the required structural changes to be adopted by different countries to strengthen their economic recovery.

More specifically, governments across the world have prompted responses by putting in places different measures to sustain their economies and ultimately their people. In this regard, the banking sector is given considerable priorities as a mechanism for supporting borrowers and businesses facing job losses, slowed sales, and declining profits. In addition, banks have to put in place measures to protect employees and customers from the spread of COVID-19 by promoting digitized and remote customer-centered transactions.

In Rwanda, the measures put in place to curb the spread of the COVID-19 pandemic (including closure, suspension of domestic travel, cancellation of public gatherings, institutions teleworking, closure of schools, and places of worship and non-essential businesses) have had negative effects on the livelihoods of many Rwandans, especially those who earn their living on a daily basis. The measures also considerably affected the Banking sector which serves the majority of the SME’s, Corporates, Consumers/Salaried class, and the general population. The Rwandan Banking Sector consists of 16 banks of which 13 are commercial banks and three microfinance banks, with nearly 36% of the Rwandan population use banking services as per the Finscope Report 2020. The Rwandan Banking sector registered continued growth year after year with loans increasing by 11.4 % between December 2018 and December 2019.

Banks in Rwanda depend mainly on domestic funding as savings constitute 80% of banks’ liabilities, as per the BNR monitory policy Dec 2019 report.

In order to understand the extent to which Rwanda’s financial sector has been affected by COVID-19, Access to Finance Rwanda (AFR) in partnership with Rwanda Bankers Association (RBA) conducted a rapid survey that aimed to inform policy debates on how to support the financial sector cope with the negative effects of the COVID-19 pandemic throughout the recovery processes.

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