Interestingly, slightly more females (77%) have borrowed in the past 12 months compared to males (76%). Despite this, formal credit consumption remains relatively low at 22%, indicating a significant room for growth.
Borrowing in Rwanda is mainly through mobile money and Savings and Credit Cooperative (SACCO), each with a 9% penetration rate. With its growing economy and expanding middle class, Rwanda offers significant opportunities for credit and financial inclusion. Therefore, we see that there is a promising market for lenders aiming to empower individuals and small businesses with credit.
As a digital lender getting the hang of the lending industry in Rwanda today, a thorough understanding of the legal frameworks that underpin the financial sector is required. So, this article will delve into the regulatory procedure you need to lend in Rwanda.
Nevertheless, the specificity and operational guidelines for lending institutions are further detailed in laws like LAW NO 48/2017, which governs the National Bank of Rwanda, and LAW NO 007/2021, explicitly addressing the governance of companies involved in financial services (Money lenders included.)
Lending, mainly through Non-Deposit Taking Lending Financial Institutions (NDFIs), operates within the finely detailed REGULATION NO 2100/2018 – 00011[614] of the National Bank of Rwanda that pertains to NDFIs such as digital money lenders.
Money lending/Non-Deposit Taking Lending Financial Institutions (NDFIs) refer to any lawful entity whose principal operations revolve around regular provision of financial services, mainly focusing on lending activities without accepting deposits or other financial services aligned with this lending model.
Requirements for lending in Rwanda
To operate as a lender in Rwanda, understanding the necessary requirements is essential. Whether you’re a new entrant or looking to expand your lending operations, knowing these requirements is vital for compliance and successful business operations in Rwanda.
Legal counsel
First, consult legal counsel about your intent to establish a lending business in Rwanda. Your counsel acts as a legal representative of your business.
Business registration
Register the proposed company as a public limited liability company through the Rwanda Development Board (“RDB”) under the office of the Registrar General, which is the body saddled with the duty of business/company registration in Kigali, Rwanda.
Minimum share capital
In most cases, there is no mandated minimum share capital for registering a company in Rwanda. However, companies operating under the NDFI mandate involved in non-deposit lending services must register with a minimum share capital of FRW 50,000 equivalent to $50,000 stipulated by the National Bank of Rwanda.
Make an application in writing to the National Bank of Rwanda for a regulatory license, accompanied by the following:
Certified copy of Memorandum and Articles of Association and certificate of incorporation or registration as the case may be.
A non-refundable application fee of fifty thousand Rwandan francs (FRW 50,000)
Duly fill the information sheet provided
Duly fill the personal declaration form as provided (directors, senior managers, significant shareholders or indirect owners of the lending business) with the following:
Certified statement of assets and liabilities
Most recent tax compliance certificate
Certified letters of recommendation from any financial institution with whom the lending business has had business with in the last five years.
Detailed CV
Business profile
Recent credit report from a licensed credit bureau
Police clearance certificate
A feasibility report including a business plan, financial projections for the first three (3) years and intended areas of specialization.
For new applicants, prepare a statement under oath that the invested funds are not from criminal activities.
Any other information the National Bank of Rwanda deems necessary to assess the applicant.
Authorised funding channels
Your lending business may be funded through the following sources: Shareholders’ funds, Loans, Donations and grants.
License validity
Lending license is valid for one year and must be renewed every 31st day of January.
Other mandatory submissions
Lenders must also register with both the Rwanda Revenue Authority and the Rwanda Social Security Board, the latter being mandatory for all foreigners employed in Rwanda.
Timeline
The timeline for registering a company in Rwanda is 2 to 7 days. In contrast, a regulatory NFDI (lender’s) license ranges from 4 to 6 months.
Are you ready to lend and empower Rwandan businesses and individuals? Obtaining a lending license is your first step. We’ve equipped you with the knowledge to navigate the entire process. Now, go forth and positively impact the Rwandan financial landscape. You’re going to be in good company, find out about licensed existing lenders.
If you’re a non-profit or development finance institution (DFI), it should be easier to run a lending program if you're already doing the hard part of reaching people most others won’t.
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