MICROCAPITAL STORY: Urwego Opportunity Bank (UOB) of Rwanda Microfinance Loan Portfolio Reaches $5.2m and Savings Reaches $2.6m

Urwego Opportunity Bank (UOB), a Rwandan commercial bank with a focus on microfinance, announced today that its loan portfolio has reached USD 5.2 million. This is an increase of 73 percent since 2006. The increase has been attributed to the growth in its savings portfolio which has now stands at USD 2.6 million. Savings are becoming an increasingly important method of funding for microfinance institutions (MFI) because it is cheaper than other sources of funding and easier to mobilize. In Africa, MFIs have found it difficult to mobilize debt capital in the past but can use deposits when it is available and a stable source.

Although most poor people still lack access to formal deposit services, according to a 2006 CGAP (Consultative Group to Assist the Poor) report, there was a 30 percent increase in savers from 2003 to 2006 around the world. The survey also showed that there are more than seven savings accounts for every loan account. Furthermore, research suggests that people who save may use other products from the MFI in the future such as loans and insurance.

According to the MIX Market, the microfinance information clearinghouse, UOB is the largest microfinance bank in Rwanda. As at the end of 2008 it had Total Assets of USD 7.5 million. UOB did not report Return on Assets, Return on Equity or Debt to Equity to the MIX for the same period. However, for the year ended 2007 UOB had a Return on Assets of -13.7 percent, Return on Equity of -16.9 percent and Debt to Equity of 22.7 percent. The number of borrowers increased from 29,143 to 35,349 as at the end of 2007 and 2008 respectively, and savers also increased from 5,305 to 49,481 over the same period. Over 90 percent of borrowers are women and the average loan balance is USD 122.

UOB was established in 2007 as a commercial bank when Urwego Community Banking S.A, a microfinance institution, and Opportunity International Bank of Rwanda S.A, a microfinance commercial bank, merged. Urwego had operated for 10 years prior to the merger as an NGO as part of World Relief Rwanda’s microfinance program. UOB now offers microfinance loans which include Community Bank loans, Solidarity Group loans, Home Improvement loans, Village Phone loans, Individual loans and savings accounts. UOB operates in 27 of the 30 districts in Rwanda and recently opened four new savings branches in Kigali and another rural branch in Bugesera. Its major shareholders are Opportunity International, World Relief Corporation, HOPE International and World Relief Canada, all non-profit organizations.

A recent MicroCapital Monitor edition interviewed Dennis Ripley, the Senior Vice President of International Business Development at Opportunity International (OI). He talks about his background, passion for poverty alleviation, how OI is increasingly using technology and the trends in microfinance. OI was founded in 1971 and describes itself as an organization committed to solving global poverty. It serves approximately 1.1 million poor entrepreneurs in 27 developing countries and offers small business loans, savings, insurance, and training in basic business practices.

By Sally Levy, Research Assistant

Additional Resources:

AllAfrica.com: Rwanda: UOB’s Loan Portfolio Grows to $5.2 Million

Urwego Opportunity Bank (UOB): Home

MIX Market: UOB

Consultative Group to Assist the Poor (CGAP: Savings; Savings for Poor People: Good for clients, good for business?; The True Cost of Deposit Mobilization.

MicroCapital Monitor: Interview with Dennis Ripley, the Senior Vice President of International Business Development at Opportunity International