Rwanda’s current investment climate comes under the scrutiny of Bank of Kigali’s CEO, Dr Diane Ngendo Karusisi, who points out that foreign investors coming in is the fastest way for the country to grow its economy and realize its development ambitions. The head of the largest commercial bank in Rwanda also highlights the importance of supporting the nation’s SMEs, its relations with the US, and how the international community should view the country today.
We are experiencing rising momentum in Africa as many investors are looking at opportunities on the continent. What would you say is attracting the attention of global investors?
I think the demographics of Africa, with such a large and young population, makes it attractive to investors, as Africa is potentially a very big consumer market. We have young people who are more educated, more connected to the world, and more technology savvy; this provides a significant workforce that is ready to produce and add value, hence an extra incentive for investors.
It is the youngest continent in the world and it is projected to boast the largest labor force globally. What are the challenges and how should they be addressed?
The main challenge might be education; we want to make these young people productive so we need to invest in an education system that actually empowers them. The traditional education model is very expensive, but today with these IT solutions we can have schools and universities connected and people getting knowledge in a very effective and efficient way.
A crucial priority for the continent is regional integration. The largest untapped market for Africa and its biggest opportunity is right on its doorstep. What are Rwanda's efforts in order to increase the much needed regional integration?
For investors, considering Africa as one single market is more attractive than looking at individual countries. Africans today understand that opportunities are first with our neighbors. We know that intra-Africa trade is the lowest when compared to other regional blocks – it averages 16%, while it stands at 70% in Europe and 50% in Asia. We need to reduce barriers. This is what we are doing in the East African Community; we are developing an integrated market of more than 150 million people. Investors that setup shop in Rwanda gain access to the Tanzanian market or the Ugandan market and more. Also, Rwanda recently re-joined ECCAS, the Economic Community of Central African States. We want to be the hub for people coming from the East to the West of Africa, want to connect these two parts of the world, the Anglophone Africa and the Francophone Africa. Being bilingual and being in the center of Africa, we believe we can achieve that mission to connect both parts of Africa and trade more amongst those African countries.
How would you describe Rwanda’s current investment climate?
In the financial sector, doing business has been significantly facilitated. For example, the land information system in Rwanda in fully automated with a unique identifier for every parcel of land in the country. As a result, land registration and transfer is done online in a simple and efficient way. This has significantly facilitated the mortgage market as banks can easily mortgage properties and provide long-term financing for owners. Also commercial courts introduced in 2008 have hugely supported businesses in reducing uncertainty and improving predictability. Commercial cases and disputes are now settled efficiently and fairly quickly, and the business community appreciates this.
How would you describe Rwanda’s finance sector?
Financial services are indeed crucial to any economy. Growth and development happen when entrepreneurs and private companies innovate, produce and add value, and create jobs. The government’s role is to facilitate by establishing an enabling environment for business. Financial services can be considered as the lifeblood for business, as entrepreneurs need financing to develop projects, produce, process food, create jobs, etc. A well-functioning financial industry is always required to efficiently channel savings to investments and hence fuel development.
In Rwanda, the financial industry is still fairly small, with a nascent capital market, and the banking industry well capitalized but unable to provide sufficient financing for development. Rwanda wants to have a big airport, and a railway connecting the country to the region’s major ports, but we cannot rely only on Rwandans’ savings. This is where foreign investors come in because this is the fastest way for us to grow our economy and to reach our ambitions. As such, the local private sector is willing to partner with foreign investors to leverage our local business knowledge and further support growth.
Bank of Kigali is the first Rwandan company and bank to be rated by a credit rating agency, but it exceeds the Rwandan market as it has been named best East African Bank for several years, amongst other awards. What are the strategic pillars on which your approach is based to excel at the regional level?
Bank of Kigali is the largest commercial bank in Rwanda, and one of the few local companies that are listed on the Rwandan Stock Exchange. Obtaining a rating is helpful mainly for our international investors, who require this kind of information to make their investment decisions.
Today, the bank’s market remains Rwanda, financing businesses and people in Rwanda. We believe that excelling in our home market is a prerequisite to doing well in the region and beyond. Our strategy is simple; it is to remain open and flexible, because this is what business people want. We want to be at the forefront of innovation and always provide the best banking products in the market. We are constantly improving our IT systems to make sure we serve our customers in a safe and efficient manner. We are committed to this country and to Rwandans, which is why the bank is investing in systems and expanding its branch network to support financial inclusion efforts.
You just mentioned another important topic, financial inclusion. How is Bank of Kigali working to enhance financial inclusion?
Technology is a key ingredient for banks and other service providers as it allows us to reach people in areas that are otherwise physically hard to reach. In addition, we have partnerships in the pipeline with various telecommunication companies to enable people to open a bank account with their mobile phone and access a number of money services from their mobile phones. We are investing in technology to stay close to our people.
Speaking about commitment to the country, SMEs account for almost 20% of your key segments. What are the services you offer Rwanda’s SMEs?
We have a wide range of products and services that we offer them, including investment loans, working capital, stock loans and trade finance. We also provide support with professional advice and financial literacy, in particular in the micro and SME sector. We want to walk our customers through from being micro enterprises to larger companies. It gives us a lot of pride when we see small businessmen and women grow and support their communities. It shows us that we are doing the right thing, transforming people’s lives financially.
We know you support many social projects in different sectors such as education and environmental conservation. What would you say is the responsibility of big companies, big brands such as Bank of Kigali, towards its communities?
We want to show our communities that we are not only in business; we are also working to promote the communities in which we work. We know that when communities are not doing well, the bank cannot strive. We have a number of projects in education, support for vulnerable households, and environmental conservation.
Regarding climate change, we believe that every person and business has a role to play. We want to make sure our country becomes climate resilient, especially as agriculture remains the backbone of our economy. For instance, we have recently partnered with a local conservation association to plant over 150,000 trees over the next three years in one of the districts of Rwanda.
With a 34.4% market share of total assets and in this year’s Q1 you already achieved a 15% rise in profits, what is Bank of Kigali’s expectations for this financial year?
We want to consolidate our market leadership by continuing to create value for our shareholders with a return on equity around 20-23%; our strategy is to continue innovating and to grow in line with the country’s development ambitions. We are developing new services, opening new branches this year to better serve our existing customers, and also to grow our customer base.
Human resource development is also a focal point of your strategy, and as you recently said you will continue investing in your people. Having well over 1,000 employees, how are you helping them to develop their capabilities?
Banking is a people-to-people service, so getting and retaining talent is key. We have a number of training programs that our members of staff undergo because we want them to grow as people, professionals and future leaders. We make them work in different areas to give them greater knowledge of the bank. We put a lot of emphasis in customer service, responsiveness and professionalism.
Following the recent visit from the US Secretary of Commerce Penny Pritzker, the US said Rwanda is a strategic ally to enhance trade in the region. What is your assessment of the relations between Rwanda and the US and how could they be enhanced also?
From where I sit, I believe commercial relations between Rwanda and the US are good. We have seen American investors in Rwanda involved in projects that are critical to its development, including power generation and others. Rwanda offers a very good investment environment with zero tolerance towards corruption as well as a very good quality of life in Rwanda with security and safety. One way to enhance Rwanda-US relationships is to enhance the information flow between the two countries, and the visit by the US Secretary of Commerce was a very good initiative in that direction.
Prior to joining Bank of Kigali, you were the Head of Strategy and Policy and Chief Economist at the Office of the President. What has been the biggest challenge you had to face?
As anyone would expect, serving a Head of State is very demanding as it requires you to remain well informed and focused to be able to continuously provide critical analysis almost in real time to support the President’s decision making. Our President is a visionary and forward-looking leader who always thinks of what’s next, and what can be done better to improve the livelihoods of Rwandans. The team supporting him is always required to be educated on new trends, and get reliable information to assess the implementation of government programs and policies – this was very challenging but also instructive and fulfilling.
Which concepts would you like people in the international community to associate Rwanda with?
Resilience, commitment and innovation; some 22 years ago, Rwanda was a shattered country known for death, extreme poverty and despair. Today, Rwanda is a thriving nation, and this is a testimony to what people can achieve together, with commitment.