Microfinance Institutions-MFIs performance would increase their penetration to bank the unbanked and spur financial inclusion if they continue adapt to the use of technologies in service delivery, experts have said
Microfinance Institutions have been vital in channeling credit to rural folks who mostly ignored by commercial banks, but they are at times constrained with low use of technologies such e-banking systems.
“We need to embrace technology so that we can increase on our service delivery as well as accountability,” said Jean Marie VianneyNzagahimana, chairman of Association of Microfinance Institutions of Rwanda-AMIR
Most of the Microfinance institutions have not yet adopted electronic systems such as e-banking, linking to the national platform as well as low use of internet which delays service delivery.
“MFIs look at these as expensive but they are important in the long run. if clients are receiving better services will continue to bank with them (MFIs),” said Rita Ngarambe, the association’s Executive Secretary
Recently, the association together with German Savings bank stepped up efforts to increase capacity within the sector, which saw efficiency and penetration in the underserved areas.
Nevertheless, the sector is still facing the challenge of increasing the savings mobilization; this according to experts is attributed to inappropriate products the MFIs put out to the market.
“This is why we are attracting more MFIs to join the Association so that now we can help them address these challenges,” said Peter Rwema, the association’s in charge for programmes.
To achieve its ambitious target to have at least 80 percent financial included by 2018, the government is looking at the microfinance sector that include Saccos to steer rural inclusion, something that will increase liquidity to lend to the private sector.
The Microfinance institutions have been vital in extending credit to the small income earners mainly in rural areas who would not be welcomed by commercial banks.
Moreover, with the country’s savings contribution to GDP stands at around 15 percent against the continents standings of 20 percent, designing appropriate products would help step up the percentages.