The Rwandan Franc (RWF) depreciated by an unprecedented 16.3% against the US dollar during the 2023/2024 fiscal year, sparking concerns over the country’s economic stability. The Governor of the National Bank of Rwanda, John Rwangombwa, revealed the alarming figures while addressing the Senate on pressing financial and economic challenges.
This marked a significant increase from the previous year’s 5% depreciation and was attributed to global factors such as the lingering effects of COVID-19 and the Russia-Ukraine conflict. “The prices of Rwanda’s main exports—minerals, coffee, and tea—declined, reducing foreign exchange earnings. This widened the trade deficit and affected the exchange system,” explained Rwangombwa.
The Senate also raised concerns about commercial banks issuing loan agreements in English, a language not widely understood by many Rwandans. Senator Evode Uwiringiyimana warned that this practice could lead to clients signing agreements they do not fully comprehend, potentially exposing them to excessive interest rates and unfavorable terms.
Governor Rwangombwa acknowledged that such practices violate banking regulations, adding, “This issue must be addressed to ensure compliance and protect consumers.”
Despite these challenges, Rwangombwa expressed optimism about the economy’s recovery. “This year, we project the depreciation to halve to around 9%,” he noted, adding that ongoing efforts are gradually stabilizing the currency.
The Central Bank’s report also highlighted mixed performances of the Rwandan Franc against regional currencies. While it appreciated by 0.82% against the Tanzanian Shilling in June 2024, it weakened significantly against the Kenyan Shilling (25.61%) and the Ugandan Shilling (5.70%).
The Governor emphasized the need for structural reforms to strengthen Rwanda’s economy and reduce its vulnerability to external shocks. The Senate urged the Central Bank to prioritize consumer protection and implement measures to stabilize the currency, noting the broader economic impact of these challenges.
As Rwanda works to navigate these economic difficulties, the discussions highlighted the importance of regulatory oversight, financial literacy, and boosting international trade to ensure long-term economic resilience.