{"id":101594,"date":"2025-05-20T10:26:59","date_gmt":"2025-05-20T10:26:59","guid":{"rendered":"https:\/\/www.africa-press.net\/rwanda\/all-news\/senators-concerned-by-wider-economic-risks-of-non-performing-loans"},"modified":"2025-05-20T11:50:27","modified_gmt":"2025-05-20T11:50:27","slug":"senators-concerned-by-wider-economic-risks-of-non-performing-loans","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans","title":{"rendered":"Senators concerned by wider economic risks of non-performing loans"},"content":{"rendered":"

Africa-Press – Rwanda. <\/strong><\/span>Senators are concerned by the growing number of non-performing loans in the financial sector, warning that misused and unpaid loans could destabilize the broader economy.<\/p>\n

This was highlighted during a session on May 19 where members of the senate committee on economic development and finance engaged with financial sector stakeholders to examine issues.<\/p>\n

In 2017, non-performing loans in the country\u2019s banks were valued at Rwf135.4 billion, according to a May 19 report by the National Bank of Rwanda (NBR). The figure increased to 176 billion in 2024.<\/p>\n

From 2017 to 2024, 2,605 immovable properties were auctioned because borrowers failed to repay their loans.<\/p>\n

Sen. Donatille Mukabalisa criticized borrowers who divert loans away from their intended purposes.<\/p>\n

\u201cSome people take loans claiming it\u2019s for business or construction, but end up misusing the funds entirely. Financial institutions need to thoroughly assess not just the project but the borrower\u2019s intentions,\u201d she stressed.<\/p>\n

Sen. Pe\u0301lagie Uwera, echoed the need for stronger financial education before loans are disbursed.<\/p>\n

\u201cBorrowers must understand that loaned money is not a gift; these are deposits from other citizens. When someone defaults and faces property auction, it affects both them and the entire financial system,\u201d she noted, suggesting a mandatory pre-loan training and certification programme.<\/p>\n

Uwera also highlighted gaps in post-loan monitoring and corruption among loan of ficers. \u201cIn some cases, borrowers are required to pay bribes to loan officers to access funds, only to end up with less than they applied for. That\u2019s unacceptable,\u201d she said.<\/p>\n

Sen. Andre\u0301 Twahirwa called for long-term solutions, recommending that financial literacy be taught from an early age.<\/p>\n

\u201cLet\u2019s instill financial discipline in our children by introducing credit education in schools. It should become part of our national values,\u201d he said.<\/p>\n

Another concern came from Sen. Sosthe\u0300ne Cyitatire, who questioned unfair auction practices.<\/p>\n

\u201cWhy do some banks demand collateral that\u2019s double the loan value, only to auction it below market price or worse, seize unrelated property? This must stop,\u201d he said.<\/p>\n

Despite these concerns, the financial sector is still showing strength. According to the National Bank of Rwanda, the sector\u2019s total assets reached a record Rwf12.9 trillion in December 2024, up from Rwf10.6 trillion the previous year.<\/p>\n

The growth was driven by increased deposits, retained earnings, and investment income. Ferdinand Murezi, a financial stability analyst at BNR, reassured stakeholders of the sector\u2019s resilience.<\/p>\n

\u201cAs of now, 48% of the banks\u2019 assets are in the form of loans; a drop from 55% pre-Covid, but still solid. We are also encouraged that 97% of loans are held by local residents,\u201d he said. Murenzi highlighted that sectors such as construction, retail, and manufacturing remain heavily exposed to non-performance.<\/p>\n

\u201cConstruction leads with 23.6% of total outstanding loans followed by wholesale and retail trade at 21.7%, household employers at 20.4%, and manufacturing at 12.6%,\u201d Murezi noted.<\/p>\n

To mitigate risks, the central bank wrote off Rwf573 billion worth of defaulted loans in 2024, up from Rwf481.8 billion in 2023.<\/p>\n

\u201cThese are no longer on our balance sheets, but they are still being followed up through legal channels, mainly via auction sales and asset recovery,\u201d Murezi explained, adding that a joint task force involving Rwanda Development Board, the Ministry of Justice, and other institutions, is working on comprehensive reforms, with a report due by the end of June.<\/p>\n

RDB\u2019s Registrar General, Richard Kayibanda, downplayed fears of widespread property auctions, noting that only 1.4% of the 177,404 registered collaterals between 2017 and 2024 ended up in forced sales. He pointed to recent reforms like digital auctions and borrower rights to challenge asset valuations that strengthened transparency. Still, he admitted challenges remain in recovering loans once borrowers default.<\/p>\n

Pacifique Nkongoli, the Chief Credit Officer at I&M Bank, said loan defaults strain bank profits.<\/p>\n

\u201cWhen a loan is written off, we have to draw from our profits to cover the loss. This money could have been reinvested into the economy. We give clients multiple chances up to more than 90 days before restructuring the loan or proceeding to auction,\u201d he explained.<\/p>\n

Jackson Kwikiriza, the Executive Director of the Association of Microfinance Institutions in Rwanda (AMIR), called for stronger financial awareness, especially in rural areas.<\/p>\n

\u201cDespite 96% of Rwandans having access to finance, many still lack financial knowledge, particularly around microfinance services. We need better project evaluation in sectors like agriculture and tourism,\u201d he said, adding that climate change and multiple overlapping loans are also fueling defaults.<\/p>\n

Damien Ndizeye, the Executive Secretary of Rwanda Consumers’ Rights Protection Organization (ADECOR), emphasized the need for borrowers to fully understand loan contracts before signing.<\/p>\n

\u201cPeople often sign contracts blindly. They should be given at least seven days to review terms. Insurers also need to play a greater role in the loan process beyond just the initial disbursement stage,\u201d he said.<\/p>\n

For More News And Analysis About Rwanda<\/span> Follow Africa-Press<\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Rwanda. Senators are concerned by the growing number of non-performing loans in the financial sector, warning that misused and unpaid loans could destabilize the broader economy. This was highlighted during a session on May 19 where members of the senate committee on economic development and finance engaged with financial sector stakeholders to examine […]<\/p>\n","protected":false},"author":84,"featured_media":101593,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,15,14],"tags":[106,5249,758],"class_list":["post-101594","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-policy","tag-economy","tag-non-performing-loans","tag-rwanda"],"yoast_head":"\nSenators concerned by wider economic risks of non-performing loans - Rwanda<\/title>\n<meta name=\"description\" content=\"Senators are concerned by the growing number of non-performing loans in the financial sector, warning that misused and u ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Senators concerned by wider economic risks of non-performing loans\" \/>\n<meta property=\"og:description\" content=\"Senators are concerned by the growing number of non-performing loans in the financial sector, warning that misused and u ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans\" \/>\n<meta property=\"og:site_name\" content=\"Rwanda\" \/>\n<meta property=\"article:published_time\" content=\"2025-05-20T10:26:59+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-05-20T11:50:27+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/rwanda\/sites\/23\/2025\/05\/sm_1747728982.983607.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"666\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Senators concerned by wider economic risks of non-performing loans\",\"datePublished\":\"2025-05-20T10:26:59+00:00\",\"dateModified\":\"2025-05-20T11:50:27+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans\"},\"wordCount\":802,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/rwanda\/sites\/23\/2025\/05\/sm_1747728982.983607.jpg\",\"keywords\":[\"Economy\",\"Non-performing loans\",\"Rwanda\"],\"articleSection\":[\"all news\",\"Economy\",\"Policy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans\",\"url\":\"https:\/\/www.africa-press.net\/rwanda\/policy\/senators-concerned-by-wider-economic-risks-of-non-performing-loans\",\"name\":\"Senators concerned by wider economic risks of non-performing loans - 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