Rwanda enacted sound laws regarding collateral in 2011 to enable businesses to use their assets, especially movable property, as security to generate capital, while strong creditors’ rights have been associated with higher ratios of private sector credit to GDP.
The Doing Business report 2017 clearly indicates that the credit information system and collateral and bankruptcy laws in Rwanda have greatly facilitated access to credit.
Globally, Rwanda stands at an outstanding 2nd position in the ranking of 190 economies on the ease of getting credit.
In addition, Rwanda strengthened the legal rights of lenders and borrowers under collateral and bankruptcy laws, and increased the scope, coverage and accessibility of credit information, with a target of increasing entrepreneurs’ access to credit.
In summary, Rwanda has made the following reforms in order to ease access to credit over the past few years:
In 2011, Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandate that loans of all sizes be reported to the central bank’s public credit registry.
In 2012, the private credit bureau started to collect and distribute information from utility companies and to distribute more than 2 years of historical information, improving the credit information system in Rwanda.
In 2014, Rwanda strengthened its secured transactions system by providing more flexibility on the types of debts and obligations that can be secured through a collateral agreement.
In 2015, Rwanda improved access to credit by establishing clear priority rules outside bankruptcy for secured creditors and establishing clear grounds for relief from a stay of enforcement actions by secured creditors during reorganization procedures.
And in 2016, the credit bureau started to provide credit scores to banks and other financial institutions while the credit registry expanded borrower coverage, strengthening the credit reporting system.