Rwanda - FinScope 2024, Financial Inclusion in Rwanda

v1: Edited anonymous dataset for public distribution

The Rwanda FinScope survey is conducted every four years since 2008 fostering public-private

partnership in the financial sector. The first FinScope demand surveys were driven by

need to generate credible information to guide policy interventions and financial service providers

in their efforts to expand the reach and depth of the Rwandan financial system, while

in 2024, the focus shifted from Financial Inclusion to inclusive finance. “Finance becomes

inclusive from the moment when it enables a given beneficiary, such as a household, a young

entrepreneur, Micro, Small and Medium Entreprises (MSMEs) to access a suite of services and

products, sometimes personalized, which respond to a specific need.”

The Rwanda FinScope 2024 survey offers a comprehensive dataset that captures the evolving

financial landscape influenced by technological innovations, changes in products and

consumer behavior, demographic shifts, policy changes, the entry of new players, and other

external factors. This report stands out as it is the first FinScope Survey conducted post-

COVID-19, providing valuable insights on how the financial sector adapted to the increased

demand for cashless devices and responded to pandemic-related risks. Additionally, it coincides

with the conclusion of the National Strategy for Transformation and the Financial Sector

Development Strategic Plan, offering a timely opportunity to monitor progress on key FSDP

III priorities, including financial inclusion, positioning Rwanda as a cashless economy, private

sector financing, and savings mobilization. The survey also addresses topical issues such as

climate and green finance and the role of financial inclusion in helping Rwandans build resilience

and align with sustainable development goals and insights are well summarised in this

report.

Levels of financial inclusion

The finscope 2024 survey findings confirm that Rwanda’s financial ecosystem’s interventions

have hugely contributed to deepening financial inclusion over the last four years. The findings

revealed that 96% or 7.8million of Rwandan adults are financially included, and the 2024

target of 100% is within reach. Financial inclusion in the baseline survey conducted in 2008

was at only 48% or 1.8 million and formal inclusion at only 21%. The survey notes a significant

decline in the use of only informal mechanisms to 4% or 358,000 people from 16% or 1.1

million people in 2020. The findings also indicate reduced disparities in access to financial

services by gender, which has narrowed over time to 1% in 2024. Likewise, the urban/rural

financial inclusion divide narrowed from 6% in 2020 to 1% in 2024. This enables women

and the rural population to participate more meaningfully in formal economic activities. The

financial system seems conducive to including people living with disabilities, as 93% of disabled

individuals were financially included in 2024. When it comes to refugees, it is normal

that many would have no access to banks and other mainstream formal financial services.

This normally creates an enormous hurdle on their way to self-reliance and economic independence.

However, this is not the case in Rwanda, as 36% of refugees have or use bank

accounts, further 62% use other formal (non-bank) mainstream financial products. Overall

the refugee financial inclusion stands at 99%.

Access to a transactional account is a first step towards broader financial inclusion as it allows

people to store money and to send and receive payments. Transactional account uptake

(combined uptake of bank and mobile wallet), increased to 77% (6.2million) in 2024 from 66%

(4.7 million) in 2020. The growth is attributed to the increased ownership of mobile wallet,

whose proportion rose to 77% (6.3 million) in 2024 from 60% (4.2 million) in 2020.

The FinScope 2024 revealed a formal financial services usage gender gap of 9% in transactional

accounts with 73% or 3 million of females having transactional accounts versus 82%

or 3.2 million of their male counterparts. Looking at each transactional account, the findings

indicate that the uptake of banking products has remained constant in 2024 (22% in 2020

versus 22% in 2024). In absolute numbers, there has been a slight increase in people with bank

accounts from 1.6 million to 1.8 million. As indicated, this growth shows a slight decline when

taking population growth into account.

The analysis further shows that 9% of adult Rwandans who do not have personal or joint

accounts in their name do use the banking system, down from 14% in 2020. The banking

activities are driven by the uptake of current transactional accounts and usage of digital financial

channels, such as bank USSD codes and mobile banking have increased in recent

years. Around 55% of the banked population uses their banking account monthly, which has

significantly dropped from 81% since 2020.

There has been an increase in Rwandans using mobile money1 for financial transactions.

About 86% (6.9 million) of Rwandans own or have used mobile money, while adults with

registered mobile wallet in their names went up from 60% or 4.3 million in 2020 to 77% or 5.8

million in 2024. There has been significant growth in the use of mobile money services since

2020, with increased usage of mobile money on a daily and weekly basis in 2024 (19% and

21%, respectively) compared to 2020 (which recorded 4% daily and 13% weekly), but a decline

for monthly usage. This may be attributed to the role of mobile money in addressing the cash

needs of households and adjustments made as coping mechanism during COVID-19 pandemic.

Money transfers, airtime purchases, and bill payments are among the services available

to mobile money users. It is encouraging to note that transactions performed via mobile

money go beyond remittances.

For many countries, FinScope provided the first opportunity to measure the number of people

who were formally served by the financial sector, and the indicators have traditionally

focused on access and uptake, however, the focus is shifting beyond this to measure usage,

quality, and impact. Rwanda started to measure financial health in 2020 and this report reflects

on milestones and starts to shape the discussions for the next target generation of

financial inclusion in Rwanda.

Turning to monitoring progress on critical priorities

of financial inclusion

Deep dive assessment on uptake and usage of financial services, reveals that 86% or 6.9

million of adult Rwandans had financial product accounts in their names, including mobile

money (77%); SACCO (28%); insurance (27%); pension (25%); bank (22%); and MFI (7%). Less

than a million or 8% of Rwandans do not have formal financial accounts in their name, but

the data shows that they are using and benefiting from the formal financial system, including

mobile money and banking channels. Indirect access to financial services is important

as it helps consumers (who normally would not qualify or afford to participate) access the

system through financial intermediaries, making channels more readily available for various

purposes. This may provide benefits such as lower costs, reduced risk, and added expertise,

contributing to economic growth and stability.

The survey report indicates that Rwanda is making significant progress towards a cashless

economy. The National Payment System Strategy 2018-2024, with strong empirical backing,

including a range of literature that documents, and the widespread adoption of Mobile

Financial Services, are driving this movement. The data shows a significant growth in the use

of digital finance services from 30% or 2.1 million) to 73% or 5.9 million) in 2024. Despite this

impressive growth, Rwandans receive their income in cash and prefer to spend in cash on the

following activities: food (88.5%); communication (64.4%); medical expenses (45%); farming

inputs (45%); education (44%) and water & energy bills (34%).

Increasing domestic credit to the private sector is the most fundamental financial sector

target relating to social and economic transformation. Many initiatives in NST1 directly support

this objective, such as SMEs, agriculture, and housing finance, and investment in education

for personal development. The findings show that the number of individuals with formal

credit has increased from 22% or 1.5 million in 2020 to 24% or 1.8 million in 2024. It is impressive

that more than two-thirds of those who borrowed money did so to develop themselves,

and further analysis showed that 42% of the self-employed who had obtained credit, did so

mainly to expand or invest in their businesses, which aligns with NST1 initiatives that seek to

support SMEs and agriculture. However, the data collected on life goals sought by Rwandans

showed that more than 3 million adults (37%) would like to invest or start their businesses (including

15% who would like to buy agriculture and business inputs and assets), and a further

33% have housing or land financing needs. Most of these inclusive finance needs are not met;

32% are doing nothing to meet their financial goals, while 31% use non-financial devices to

meet these goals.

The assessment of saving culture reveals an impressive growth in the formal saving mechanism.

According to the results, overall saving uptake was around 86% or 6 million in 2020,

which slightly decreased in proportion to 85% or 6.9 million in 2024, representing a 13%

change compared to a 14% change in population growth. Proportionally, this reflects a

1%-point drop. This decline is driven by informal savings, while the number of adults with formal

saving products grew from 3.8 million or 54% in 2020 to 4.8 million or 59% in 2024, this is

26% change. This change includes innovative savings mobilization schemes such as Ejo-Heza

Program and strengthening existing formal saving mechanisms like Banks, Capital Market and

Pensions. This is a significant achievement, as Rwanda seeks to increase savings as a percentage

of GDP from 14% to 30% in a bid to transform its economy into an upper-middle-income

country by 2035 and a high-income country by 2050. The number of adults with any retirement

savings went up from 7% in 2020 to 25% in 2024.

There has been another surge in the number of Rwandans with personal insurance products,

from 17% or 1.2 million in 2020 to 27% or 2.1 million in 2024. This jump is driven by general

insurance increasing from 4% in 2020 to 10% in 2024, and life insurance which grew from 5%

in 2020 to 10% in 2024. Though recording slightly decline from 4% in 2020 to 3% in 2024,

microinsurance in Rwanda continues to be a golden opportunity, as the income streams of

90% can be characterized as low, unpredictable, and irregular. Yet, financial setbacks are numerous

and frequent.

Speaking of numerous and frequent financial setbacks, the FinScope 2024 survey report

looked at restructuring financial services to address climate change related risks and opportunities,

especially at the household level, as a priority. Unlike previous surveys, the 2024

study included questions on climate-related shocks and their impact on households. The

results indicate that 69% (5.6million) of Rwandans reported experiencing climate change-related

shocks. Rwandans experience mostly weather-related unexpected challenges, such as floods (56%), drought (25%), and storms (21%). Furthermore, a notable 27% experienced pest

infestation challenges, which may lead to damage to plants in production fields, forests, or

natural habitats, causing substantial damage to productivity, biodiversity, or natural resources.

Of those who experienced climate change-related risks, 53% experienced repeated climate

change-related risks. Despite this, a majority of the respondents did not have a solution to the

climate-related shocks; only 30% (2.45 million) of those who experienced climate change-related

risks have put up measures to mitigate the impact on their finances, highlighting opportunities

for policy reforms and financial product offerings to assist in coping with these

encounters.

The assessment of Rwandans’ perceptions on the socioeconomic and financial impact of

the COVID-19 pandemic reveals increased vulnerabilities in the livelihoods. Two-thirds of

Rwandans’ livelihoods (i.e., 66% or 5.4 million) were negatively affected by the Covid pandemic

across livelihoods sources. Just above 2 in 5 or 42% adults indicated that their income

or revenue was reduced, 34% could not operate, and 29% stopped working for some time.

It is accepted that the global COVID-19 health crisis and government responses, such as

lockdowns restricting economic activities, increased the need for contactless financial products

and services, accelerating the shift to digital finance in many economies. Rwanda Fin-

Scope 2024 Survey looked at the use of financial products and services during the Covid-19

pandemic and a good story on using the pandemic as a catalyst emerges. Around 1.3 million

(16%) adults started using different financial devices or mechanisms during COVID-19 crises.

Of those who reported having started using financial products and services, 56% of them

started using mobile money during the pandemic. Further 13% or 1.1 million adults used mobile

money more frequently because of the situation. However, the behavior of using online

banking platforms or using card tapping did not change much amongst Rwandans.

The survey employed an improved framework of financial health (with the aim to measure

the impact of financial inclusion on Rwandans) constructed from a composite index of four

parameters (sub-indices with equal weighting): ability to manage day-to-day needs, taking

advantage of opportunities, resilience against shocks, and ability to act through having control

over one’s finances. The indices have been grouped into four quartiles, such that the

healthiest individuals (financially healthy) are those with index values ranging from 75 to 100.

The data shows that 10% are financially healthy, 57% are financially coping, 31% are financially

vulnerable and 3% are extremely financially Vulnerable. Overall, the results of the Survey

indicate that the financial health of Rwandans is improving; 10% of adults (about 1.3 million)

who were financially vulnerable in 2020 are now financially stable (coping or financially

healthy). This means that more than two-thirds of adults are in a better situation to balance

their income and expenses, take advantage of economic opportunities, be resilient, and make

sound financial decisions while having control over their financial affairs.

Basic units of analyisis were individuals and households.