towards a cashless economy

Towards a Cashless EconomyA case for Rwanda

Towards a Cashless Economy

Jean Claude Gaga - CEO @

Rwanda at a glance

Rwanda

2nd Country in ICT

Promotion Globally 2nd Easiest

Place to do Business

2nd most competitive economy in

Africa

3rd in Africa in hosting

International Association

events

9th safety and security

globally (1st in Africa)

5th Best Place to be a Woman

Globally (1st in Africa)

9th Global Most

Transparent Government (1st in Africa)

WB Report 2018

International Congress and

Convention Association 2017

Global Information

Technology report 2016

Travel & Tourism

Competitiveness Report

2016-WEF

Global Gender

Gap Report

2016

Global

Competitiveness

report 2016-17

Africa Competitiveness

report 2017



Expand the FS ecosystem by delivering interoperable solutions using

best capabilities and most reliable technology

Why the fight against Cash?

• It has no memory… • it’s bad for countries

• It has no conscience… • it’s bad for people

• It has no API… • it’s bad for business

Source: David Birch. The War on Cash

FinScope in Rwanda


Commercial Initiatives: 1. Increased branch networks 2. Mobile vans 3. Internet banking 4. Agent banking 5. Mobile banking (m-banking) 6. Mobile money 7. Loan protection insurance 8. Private pension (informal

groupings) 9. Children’s savings

Dev’t policy is guided by Vision 2020:“Transform Rwanda into a middle income country, economic trade

& communications hub by 2020”

By-laws & Policies : 1. Payments system bills (e-payments) 2. Automated trx by 2018 3. Insurance, MFI & pension laws 4. Loan guarantees from gov’t to

increase access to credit for small businesses

5. Financial education strategy 6. Credit Reference Bureau

FSDP (Financial Sector Dev’t Programme) was

launched in 2006 FinScope (2008,2012,2016) is a

research tool to guide policy makers & regulators provide FS providers with crucial strategic

info that drive financial behaviour & those that prevent

individuals from using the services.

FSDP = “develop a stable and sound financial sector that is sufficiently deep and broad,

capable of efficiently mobilizing and allocating resources to address the

development needs of the economy and reduce poverty”

Gvt

Init

iati

ves

to h

elp

ach

ieve

Fin

anci

al In

clu

sio

n

Targ

ets

(20

17

–8

0%

, 20

20

–9

0%

)

Understanding People’s lives – FinScope 2016


Total adult (16+) population

6million

• 84% reside in rural areas• 63% are 40 years of age & younger • 75% have primary education or less• 57% Female

84%

16%

Rural Urban

43%

57%

Male Female

16 – 17 Yrs6%

18 – 30 Yrs34%

31 – 40 Yrs23%

41 – 50 Yrs16%

51 – 60 Yrs11%

>60 Yrs10%

Understanding People’s lives – FinScope 2016


21%

54%

21%

1%

3%

No formal education

Primary education

Secondary education

Vocational education

Tertiary

Levels of Education Distribution

51%

37%

10%

9%

4%

3%

3%

Money from farming

Piece-work

Self-employed (have own business)

Salary/wages from a farmer

Salary/wages from an individual

Salary from government institution

Salary from a privatebusiness/company

Source of Income Distribution

Main perceived barriers to banking in Rwanda relate to low or insufficient income or insufficient, irregular employment. Key barriers to the uptake of mobile money and insurance relate to product unawareness and/or product knowledge.

Determinants of Financial Inclusion


Income

• FinScope surveys show that upper-middle income countries show a higher proportion of banked adults compared to its low-income counterparts.

• Those with regular sources of income, i.e. salary/wages are also more likely to be financially included. Rwanda is classified as a low-middle income country.

Location

• Higher density of (formal) FS providers in urban areas & better infrastructure also result in shorter travelling time to e.g. the nearest bank branch.

• The most significant difference between rural and urban levels of financial inclusion is the uptake of bank products/services.

Gender

• There are slightly higher levels of financial inclusion among males compared to females due to a number of reasons (e.g. economic, social, legal, and cultural).

Age• The 2016 study showed that Rwanda has a relatively young population.

Education Level

• The levels of financial inclusion are lower among people with low levels of education (primary education or less).


89% adults in Rwanda are financially included

Banked 26%

Other formal

(non-bank)

65%

Informally served

72%

Excluded

11%

Formally served 68%

Have/use formal financial products/services including banked and other formal (non-bank) financial services.

Usage is driven by debit cards, loan from the bank and high uptake of mobile banking.

Have/use other formal (non-bank) financial products/services (MoMo, Sacco). Regulated

Use informal mechanisms ; money lenders, tontine. Unregulated

Do not use any financial products or services (neither formal nor informal) to manage their financial lives.


Impressive financial inclusion growth has been driven by “other formal” financial services. Other formal e.g MoMo, SACCO or Insurance product

Financial Inclusion Strand


23

30

9

23

10

15

58

32

2012 USAG E

2016 USAG E

Used past month Used last 6 months but not past month

Did not use in 6 months before FnScope Not formally served

50 44 62016

Quality of Financial Inclusion Measure

Thinly served Moderately served Adequately served

Usage however continues to be a concern

Payment Systems Statistics


84 1

67 2

92

33

3

35

4

38

0

40

0

99

22

7

66

6

94

6

1,1

52

1,7

18 1,8

85

0 0 0

49

1

1,0

09

1,4

22

1,0

26

2010 2011 2012 2013 2014 2015 2016

Instruments of Payments

No of ATMs POS for merchants POS for Agents

• Payment Acceptance Density is 80 times lower than typical Cash-lite countries

• 5 Year (2017 – 2022) Payment Strategy to promote e-payments

• Merchant POS concentrated in urban areas due to data connectivity

• Economy remains heavily Cash based

Mobile driving DFS


99 22

7

66

6

94

6

1,1

52

1,7

18

1,8

85

0 0 0 49

1

1,0

09

1,4

22

1,0

26

29

0

1,3

87

3,0

85

8,7

45

25

,48

2

40

,46

7

59

,95

2

2010 2011 2012 2013 2014 2015 2016

Bank Agents Vs MNO Agents

POS for merchants POS for Agents MNO Agents• Exponential YoY

growth of Mobile Wallets since launch in 2010

• Mobile penetration about 80%

• Need for interoperable ecosystem

Mobile driving Cashless economy


41

,37

7

11

5,2

00

38

9,2

69

48

7,4

98

63

8,8

69

65

7,9

04

74

6,4

58

23

1,0

00

63

9,6

73

1,4

40

,54

1

2,5

38

,65

1

6,4

80

,44

9

7,6

63

,19

9

9,7

35

,69

4

2010 2011 2012 2013 2014 2015 2016

Bank A/Cs Vs Mobile Wallets

No of debit cards Mobile Subscribers

• 30% of Bank customers are carded• Major schemes: SmartCash, Visa & Mastercard• 3 MNOs: MTN, TIGO & AIRTEL

39

3,0

88

1,9

76

,37

6

5,7

53

,16

3

7,7

74

,05

3

7,4

88

,70

7

7,5

05

,81

5

8,1

83

,11

6

82

9,3

79

3,4

20

,88

5

22

,19

1,6

74

57

,14

7,7

77

10

4,7

73

,11

5

16

8,6

12

,45

5

20

5,6

87

,96

6

2010 2011 2012 2013 2014 2015 2016

Number of Transactions

ATM transactions MNO Wallets

• ATM trx have stagnated since advent of MoMo

• MNOs eating banks’ pie

Payment Systems Statistics


99 2

27

66

6

94

6 1,1

52

1,7

18

1,8

85

0 0 0

49

1

1,0

09

1,4

22

1,0

26

2010 2011 2012 2013 2014 2015 2016

POS for merchants POS for Agents

84

167

292333 354

380 400

2010 2011 2012 2013 2014 2015 2016

No of ATMs

231,000 639,6731,440,541

2,538,651

6,480,449

7,663,199

9,735,694

2010 2011 2012 2013 2014 2015 2016

Mobile Subscribers

290 1,387 3,0858,745

25,482

40,467

59,952

2010 2011 2012 2013 2014 2015 2016

MNO Agents

Payment System Vision (2017-2022):

To build a cashless Rwanda through a world-class payment system that is secure, reliable, efficient, scalable, innovative,

and promotes financial inclusion.

Limitations impacting RNPS


Inadequate Regulatory

Framework

Limited

InteroperabilityGaps in Network

Infrastructure

Low consumer

access to

transaction and

payment services Large Informal economy Low financial literacy


Role of RSwitch in promoting DFS

Banks

MNOs

MFIs / Cooperatives

\ \

Mobile wallet

Bank acc

Merchant POS

Cash agents

eCommerce

\

Issuers Payment channels

Acquiring channels

Acquirers

Interoperability : a much BIGGER ecosystem

Banks

MobileMoney

Operators

SACCOs and MFIs

Online

Mobile

Card

ATMs

POS

Bank account

Mobile wallet

Cash agents

eCommerce

Bill Paymentsand collections

Intl. Remittances

Bulk Payments



Expand the FS ecosystem by delivering interoperable solutions using

best capabilities and most reliable technology

E-Government Services - RwandaOnlineRwandaOnline is a private company with a 25 Yr PPP agreement,

to provide a single platform for all gov’t services through internet and mobile devices.

RwandaOnline recovers its investment only when Citizens start accessing

services through its platform.

RwandaOnline will not charge the citizen for the provision of the service

but will be paid a fee by GOR for developing and operating the platform.

Irembo is the brand name for the one-stop platform for e-Government

services built by RwandaOnline.

Its role as a platform is the provision of Government services with ease,

efficiency and reliability.

Portal access

USSD Access

Agents


E-Government Services - RwandaOnline

Create A/C with NID & Mobile

Apply & Pay Onlineusing Mobile Wallet or VISA &

Mastercard

SMS & Email notificationafter submission. Also, citizen

receives anotification in case of

status change with theapplication

IDEALLY The citizenreceives documents online.

OTHERWISE The citizenreceives a notification to

pick up document

1.

2.

3.

4.

How it worksJune 2015 Payment Gateway

July 2015 Live with 5

services

70 services

today

End 2017 to have

122 services

April 2014 PPP

agreement


E-Government Services - RwandaOnline

Citizen visits agency

office to collect

application form &

requirement

1

Citizen visits

bank to make

payment

2

Citizen returns home to collect supporting documents

3

Citizen brings

completed application, supporting documents,

proof of payment to

agency office

4

Citizen returns home awaits

processing

5

Citizen collects government

document from agency office

6

Citizen return

s home

7

Before RwandaOnline

Citizen visits Irembo on mobile

device/computer, fills out online application,

uploads supporting documents, pays by credit card or mobile

money

1Citizen collects

government document from agency office2 Citizen returns home3

After RwandaOnline


Thank You

towards a cashless economy

Economy & Finance