Ahead of the Kigali CHOGM, Executive Director Freddie Woolland spoke to the Chief Executive of Rwanda's largest company, Dr Diane Karusisi.
FW = Freddie Woolland, Executive Director, CSG
DK = Dr Diane Karusisi, CEO, Bank of Kigali
FW = Dr Karusisi, what do you think are the greatest risks to Rwandan and regional economic security?
DK = The greatest risk, when you look at the business we do, is the instability of our macro-economic situation, combined with a lack of growth. Our revenue is driven by the lending arm of our business, which is obviously impacted when the economy is not growing. However, we are comfortable now that the economy in Rwanda is stable having shown consistent growth over the past decade and this has helped our business to grow.
Another large risk at the executive level, which is currently poorly understood, are the threats to cybersecurity. We have many digital channels, and many people now do their banking via phone and the internet. Whilst we have not had any major breaches ourselves, we know that people out there are always trying to find new ways to penetrate our systems. This is something that definitely keeps me awake at night because its not predictable. You can do the right things, have the right firewalls, be in line with the regulatory requirements, but attacks are still very difficult to predict.
FW = From an organisational perspective, how do you anticipate the next threat?
DK = I wish we were at the level where we could predict what was coming next. At the moment we’re focused on protecting our business environment immediately and complying with regulation. We have a team focusing on information security, but that team has not matured yet to be able to predict new threats or even predict trends. What they do typically, is respond to vulnerability and penetration tests carried out by third parties, who inform us what we need to fix, and our team is constantly working on these kinds of threats. This is why we think your conference would help open our minds in terms of where the world is going in the field of cybersecurity threats and being more proactive in challenging them, rather than just reacting and waiting for experts to tell us what to do.
FW = Thank you for saying so! We agree that this is a discussion that needs to take place and there are valuable answers from around the Commonwealth that need to be shared.
The rise of crypto-currencies has opened scope for more threats to Cybersecurity – how is the Bank of Kigali responding to this?
DK = We have been following the debates around cryptocurrencies closely, and whilst we are open to embracing new technology, we haven’t seen anything yet that really works. For a bank like ours, our main challenge is to provide access to financial services to the majority. Only thirty percent of people in Rwanda have access to a bank account, but new technologies are making it cheap and easy to provide banking services to people in rural areas with little incomes. As people can now bank on their phones, we can provide that service to them at pretty much zero cost to our organisation. As such the idea that cryptocurrencies can reduce costs further, is not one I particularly believe in, as mobile technology has already done this.
FW = You mentioned the safety and ease of doing business in Rwanda. Rwanda has gone on a monumental journey over the past 25 years to progress up the ranks of the corruption index, as well as to be widely regarded as the safest country in the continent. What role has the banking sector played in that?
DK = Rwanda has a very young population, the median age is 19, so in a few years all these people will be entering the workforce and the economy needs to be able to absorb that. The role of the bank is to support companies and industries that create the jobs that absorb this emerging workforce. We take this very seriously. We understand that if you’re financing a business or an infrastructure company - companies that create many jobs with value chains that spill over enabling people to build small businesses - this will help more people pull themselves over the poverty line and thrive rather than just simply live.
FW = Is it unusual for a bank to consider itself to have social and community duties?
DK = In a developing in a country, whatever you do needs to contribute to that momentum of development. I imagine that banks in the UK are not involved in helping small farmers, building roads or financing energy companies. For us, all those things need to be built because they are the foundation on which the economy can grow. Being the largest bank in an economy comes with benefits, but also with responsibility. To some extent you have to sustain the economy. I always tell people that investing in our stock is pretty much investing in Rwanda, because as the country grows, we grow and become more profitable. As a result of that I think its very important that we have that social aspect in everything we do. When we are funding business and locating capital we look at companies not only from a business angle and a profit angle, but also in terms of social impact, and job creation. It is so important for us to build a critical mass of businesses, small, medium and large, that can help take the economy to the next level.
FW = Access to finance at the community level remains one of the key drivers of poverty alleviation and has significant security upsides. How can an institution such as the Bank of Kigali help drive a culture change that improves access to finance?
DK = In Rwanda only thirty percent of people have bank accounts. This does not mean people don’t have access to financial services. Rather, phones and telecoms companies have taken over the role of bank accounts; people can send money, have access to mobile wallets, and can pay bills. What we seek to offer instead is a longer term view. We don’t want our clients to just be able to transact, we want them to be able to save. We tell them that we want to incentivise the right behaviour. If you save, pay your bills on time and pay your taxes then you get a better score with the bank that allows you to access better rates when you access credit. We have a vision for how businesses can save and transform; how they can truly grow the economy. We started with farmers when we launched our mobile wallet – we already have about 230,000 people, which shows that people were waiting for these services. We are hopeful that we will be able to gain more clients this way and have products that are relevant for them. It is through saving and access t credit that the communities will be able to make the necessary investments in their future financial security.
FW: And finally, what two policies would you champion, that in your view would have the greatest impact on financial security in Rwanda?
DK: One initiative would be to push savings as much as possible. We have been talking about this for a long time, and have been pushing people to save more and more, if you look at countries like South Korea, even when they had low GDP they were saving twenty to thirty percent of their incomes. As a bank we need to design the right products to be able to incentivise people to save and to show people that a country that does not save cannot invest.
The second thing would be around cyber, most financial transactions are now done on the phone and in the next two or three years I imagine 100% of people will bank on their phones. As a result, we need to raise awareness that people should protect their passwords and be aware that there are people out there that do not have the best of intentions. We need to be able to protect this E-money effectively.
In time for Rwanda's hosting of the Commonwealth Heads of Government Meeting the Commonwealth Security Group is doing a special feature on the country as part of the forthcoming Commonwealth Security Review. In it we speak to leading figures across Rwanda and explore how the country has turned fortune on its head and has set course for a brighter and stable future.