Development of the Digital Financial Ecosystem in Rwanda: Drivers, Lessons and Way Forward

Digital financial services (DFS) have the potential to promote payments efficiency and boost financial inclusion even in remote areas with minimal traditional financial infrastructure such as bank branches. In Rwanda, the digitization of payments is a key policy strategy in a bid to transform the country towards a more cashless and knowledge-based economy. Since the establishment of the Rwanda Integrated Payments Processing System (RIPPS), various policy and product innovations have been put in place to increase the share of transactions done electronically. This study examines the development path of digital financial services in Rwanda over the decade 2011-2021 using a mixed-methods approach. The quantitative part entails descriptive and regression analysis to ascertain the trend, patterns and determinants of uptake for key DFS products in the country while the qualitative key informant interviews with key stakeholders are used to ascertain the opportunities and challenges for further promoting DFS in the country. The findings indicate that between 2011 and 2021, the number of people using Internet and mobile banking increased quite substantially. The number of active mobile money subscribers increased from 1.6 million in 2012 to 5.1 million in 2021, while credit cards increased from 115,200 in 2011 to 686,309 in 2021. The transactional volume and value also increased remarkably, partly fueled by COVID-19 and innovative use of mobile money, including electronic tax payment. The study recommends improving Internet connectivity and quality, promoting digital literacy, improving interoperability and enhancing cyber security to further boost DFS in Rwanda.