IT Systems for Effective MFI Activity in Rwanda

In his article ‘Rwanda: How MFI’s (Micro-Financing Institution) Can Develop Cost-Effective IT Systems,’ Saddiq Mwai explains the potential benefit of creating a transparent, cooperative IT framework between MFI’s, in order to cut costs and effectively address poverty reduction in Rwanda. As Mwai describes, a financial services sector is essential to the success of nearly all social and economic objectives. MFI’s in Rwanda currently incur large expenses when serving their target populations, which are often rural and remote. These logistical expenses hinder MFI’s from doing ‘the most good.’

What Mwai proposes is a ‘common information technology platform to reduce costs associated with the acquisition, operation and maintenance of information systems.’ In other words, MFI’s would collaborate in creating a shared platform, on which MFI’s could communicate and share both information and capital with each other on a regular basis. This network would be operated from a processing hub in Kigali, and would be available to any MFI with simple PC-access. MFI’s could be charged on a ‘per account’ or ‘per client’ basis to use this existing, communal software. This on-demand payment method outsources software development costs and is significantly cheaper than purchasing or creating new software altogether.

In addition to cost-sharing among fellow MFI’s, such a network would allow MFI clients to complete necessary transactions via mobile phone, which would significantly reduce transportation and logistics costs to the benefit of both MFI’s and the consumer.



Urwego Opportunity Bank, an agricultural MFI in Rwanda


This proposal represents a promising opportunity for micro-finance institutions in Rwanda. Technological advances have provided new, unprecedented methods of lowering lending and transaction costs  in the developing world, and Mwai’s proposal takes a collaborative, cost-sharing approach to poverty reduction. Micro-finance and micro-lending institutions have the principle goal of reducing poverty and fostering self-sustaining community development. Therefore, any measure that would increase transparency and cost-efficient access between client and provider would be a positive investment, even if it means partnering with other institutions. With the increased disposal income once used for software and maintenance of a personal platform, an MFI can increase the amount of social ‘good’ it provides. The more resources available, the more potential there is for poverty reduction.

Read the article here.


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