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Rwanda’s Financial Journey: Mobile Money, Inclusion, and the Road Ahead

 




I read the 2024 Rwanda FinScope Report with a mix of admiration and unease. At face value, the report reveals impressive achievements, with the financial inclusion rate in Rwanda standing at an astonishing 96%, up from 93% in 2020. Impressive, no doubt, but being an economist, I have to ask: Is there more to the numbers than meets the eye?

An Impressive Achievement

In making sure that people are financially included, Rwanda has undoubtedly gone a long way. Today, the country boasts 92% of its adult population being formally financially included, largely driven by mobile money services. The most impressive change can be seen in rural areas, where traditional banking services were absent. To the layman, this means that most Rwandans are able to access services such as mobile wallets and Umurenge SACCOs, which allow them to save, obtain credit, and make certain payments.

For example, mobile money usage is flying high. Whereas in 2020 only 62 percent of Rwandans used mobile money, in 2024 that number surged to 86 percent, making it the most used financial tool in the country. This sudden increase is a big victory for Rwanda because mobile money allows even the people deep in the countryside to participate in the financial system.

A Story Beyond the Numbers

But here is the thing: while these numbers of financial inclusion in Rwanda are undeniably impressive, there are areas that beg for a closer look. Let me talk about the formal banking sector. The report shows only 22% of Rwandans are "banked"-the same percentage recorded in 2020. So, even though Rwanda's formal inclusion has increased, banking services have essentially stagnated.

Why should this matter? As convenient as mobile money is, it falls short of replacing traditional banking services that would grant access to more substantial loans, investing options, and higher-yielding savings accounts. The disparity between users of mobile money and formal bank account holders indeed does call into question the long-term financial growth of the population. Without less reliance on mobile money, can a population really start building wealth? That is one question that remains unanswered.






Gender Disparities: Progress, but Not Enough

Rwanda has made great improvements in reducing the gender gap in financial inclusion. For instance, in 2020 the difference between men and women in financial inclusion stood at 6%, while that gap is expected to reduce to the low of 1% by 2024. Well, something quite laudable for which I do really appreciate those driving the policies. However, if we go into the details, a bigger issue actually comes out.

According to the report, while 82% of men have a transactional account-whether it be a mobile wallet or a bank account-only 73% of women do​. This constitutes a 9% gap in transactional accounts, and such a trend not only reflects an increase in financial inclusions but also signals that women continue playing catch-up in their efforts to access major financial tools. The following question then remains: what can be done, rather, to guarantee that women have full usage of financial services instead of just having access to them for economic growth?

The Rural Divide

On a similar note, the divide in the urban-rural space has shrunk considerably as the financial inclusion in the rural area stood at 96%, 1% less than the urban counterpart. This is laudable, given that it comes in the backdrop of urban areas having limited reach for rural populations. I was still surprised by how laggard rural areas remain in banking. While mobile money has penetrated deep into rural regions, the rural residents are only a few percentage "banked." This raises concerns whether mobile money can sustainably bridge the economic gap between urban and rural Rwanda in the long run.

Questions of Depth and Quality

While access to financial services has clearly grown, what of the quality? The report has little to say on the depth of the financial engagement. How many Rwandans are using their financial accounts to invest, save for the long term, or access credit for business growth? Owning a mobile wallet alone isn't going to confer financial resilience.

Then, there is climate-related financial risk. With 69% of Rwandans experiencing shocks to climate change, like floods and droughts​, only a tiny fraction can hope for access to financial products that may help them mitigate such risks. Yes, micro-insurance, among other innovative products, exists; however, they are very limited in reach. Can Rwanda's financial sector be said to succeed when such a large part of its population remains so vulnerable to climate disasters?

A Mixed Verdict

By any measure, as an economist, I find the progress reflected in the 2024 FinScope Report impressive yet incomplete. Rwanda is indeed on its way to achieving universal financial inclusion, while its rise in mobile money has been nothing short of revolutionary. However, this stagnation in traditional banking, coupled with the lingering gender gap and vulnerabilities across rural and climate-affected populations, suggests work remains to be done.

The question remains: Will Rwanda ever go beyond mere "inclusion" of its population into the financial system and actually equip them with the ability to make use of those services in an optimal way? Only time—and the next FinScope report—will tell.

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