Rwanda: Bank of Kigali to buy life insurance business or start its own

The bank, which already operates in general insurance, is in talks with some local life insurance businesses and could also decide to start its own operation, says Karusisi. A decision may be made later this year or in 2021.

Rwanda’s young population offers prospects for rapid growth in financial services. The Bank of Kigali’s figures show that 60% of the population is under 24 years, with 93% under 54 years. The country’s life insurance industry grew at a compound annual rate of 17% between 2014 and 2017, outstripping non‐life insurance on 9%, according to the World Bank.

The insurance sector is still far from capitalising on the opportunities, says the World Bank.

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• Overall Rwandan insurance penetration at 1.6% of GDP lags Kenya on 2.6%.
• Yet there is high awareness of insurance in Rwanda, including in rural areas, in contrast to other comparable countries, the World Bank says.
• There’s also a virtually complete absence of competition to serve markets outside Kigali, it adds.

Bank of Kigali, which offers general insurance is Rwanda’s largest commercial bank. The Rwandan Social Security Board and the country’s Agaciro sovereign wealth fund between them hold 56% of the bank’s parent, BK Group.

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The bank has “strong capital levels.” says Karusisi. She’s now waiting for the central bank to approve the payment of its dividend. The central bank has indicated that the Bank of Kigali may declare the dividend, while the date at which it will be allowed to make the payment to shareholders has yet to be determined, says Karusisi.

Free smartphones

Only essential Bank of Kigali branches in busy areas were kept open during the coronavirus lockdown, with staffing levels around 50%. Limits for digital wallet transfers were increased. “Our systems were resilient,” says Karusisi.

The bank is migrating some services to digital channels rather than branches. These include applications for new bank cards and altering the terms of an existing mortgage.

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Karusisi expects a longer-term shift away from using branches and ATMs, with more people carrying out transactions on their phones.

But there’s “still a lot to be done” to push people towards using digital channels. The bank’s branches were “stormed” when they reopened after lockdown easing she adds.

Digital channels assume customers are affluent enough to afford them.

• “If you don’t have a phone, you’re excluded,” says Karusisi.
• One way to attack the problem is to give away smartphones, as the bank did in January as part of the Connect Rwanda campaign.
• The initiative shows the scope for shared collaborative efforts between banks, other business sectors, government and the diaspora, Karusisi says.
• A long-term plan is essential. “Giving a person a phone is not enough,” Karusisi says. “They need electricity, airtime, data and education.”

Bottom line: Banks, insurers and governments have a shared interest in promoting digital enablement through smartphones.