March 19, 2020

Central Bank Unveils COVID-19 Economic Stimulus Package

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Inside a market in Kigali

The National Bank of Rwanda (BNR) has issued a raft of measures to deal with the an already existing impact of the COVID-19 global pandemic on the local economy.

Government ordered suspension, ban or reorganization of different activities in the country during the past weekend. With 11 COVID-19 confirmed cases so far, private businesses may still be open, but are beginning to struggle. People have been told to stay at home.

Rwanda Hospitality Association, the umbrella platform for hotels and travel companies said on Monday, barely a day after first virus case was confirmed, that it had already lost $8m due to cancelled international conferences. More cancellations expected, meaning we are looking at a huge shock.

Now, the central bank has come up with a package to help cushion the economy against expected shocks. It has set up Rwf 50billion ($54m) facility to keep the banks open, thereby hopefully encourage them to lend.

The central bank has also reduced the reserve requirement ratio for commercial banks from 5% down to 4%. It means the banks now have more leeway to lend since the money that must stay in volts is less than before.

For the business community, the central bank says commercial banks are “exceptionally allowed” to restructure loans of existing borrowers so that they can access more cash if they are having cash flow troubles.

What this means is that even if a business already has a loan in the bank, the central bank, for now, will have no objection to discussions between the commercial bank and client for an additional cash, or restructuring of the loan.

In bid to cut back on the use of bank notes which are also said to be possible conduits for the spread of the virus, the central bank has introduced changes to cashless transfers.

There will be “zero charges” on all mobile money transfers, which is a huge concession from the telecoms. They will, for the coming 3 months beginning today, make no money from mobile transactions.

The transfer of money from bank accounts to mobile money accounts will also attract “zero charges”, allowing people to pick money from their bank accounts while at home and make personal payments for needs at a neighborhood shop.

The central bank has also increased the mobile money transfer limit to as high as Rwf 4m, a concession that also lets people send big cash from the comfort of their homes using their phones.

Central bank Governor John Rwangombwa said in a statement late Wednesday night that citizens should take advantage of these changes by making “all their transactions” by digital means.

The new changes by the central bank will last a few months, and could be reviewed, depending on what happens in the next 3 months.

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