The adverse effects of the Covid-19 pandemic are trickling down to major sectors of Rwanda's economy with tourism and hospitality, aviation, retail, and manufacturing bearing the brunt of the strict measures the government has put in place.
That has essentially affected the growing digital payments, which are linked to the same sectors that were hit. But if there's one thing to thank for 2020 is the fact that the outbreak also accelerated adoption of digital payments in many other sectors.
Many experts now agree that online grocery stores, online pharmacies, telecommunication players, education technology platforms, online gaming, and those that facilitate recharges, and bill payments saw an uptick in digital payments.
Lucy Mbabazi, who's in charge of advocacy and partnerships at Better than Cash Alliance, a UN-led initiative, says Covid-19 showed the value of digital payments in keeping the economy going while shut down.
"The lockdowns showed there's still a lot of work to do in getting businesses to accept and utilize digital payments when serving customers. Those without digital payments struggled most," she says.
In any way, she adds, the pandemic highlighted the value in swift growth of volumes of transactions and value of transactions.
That is true for the most part because data shows that there was a significant increase in the uptake of digital payments.
The volume and value of transactions in mobile payments, mobile banking, and internet banking, all increased significantly during the first half of 2020 when the pandemic hit.
A passenger uses Tap&Go card to pay for transport fee as he boards a bus in Kigali. / Photo: Craish Bahizi
The volume of mobile payment increased by 51 per cent in the first half of 2020 to 503,781,913 from the previous year, while the volume of mobile banking increased by 29.1 per cent to 4,897,019.
In the same period, the volume of internet banking went up by 71.2 per cent and the value of transactions increased by 48.8 per cent to Rwf3,024 billion.
That is partly because payment system service providers offered cost incentives at the onset of the pandemic. In March, the payment industry agreed to zero charges on all transactions between bank accounts and mobile wallets.
They also agreed on zero charges on all mobile transfers, zero merchant fees on payments for all contactless point of sale transactions, and increased the limit for individual transfers.
The measures went along to incentivize people and businesses to adopt digital payments, according to the National Bank of Rwanda.
Mbabazi asserts that the outbreak highlighted that the cost of transactions has something to do with how quickly digital payments are adopted.
"When Central bank ordered zero fees and cash was discouraged, more people took up digital payments," she notes. "The good news is merchant payments remain free for consumers, with or without the pandemic, therefore every business can and must offer digital payments."
Still, she says there are big businesses that reject digital payments.
"There were businesses selling mask-making materials who categorically refused digital payments, demanded cash. And if you didn't get an EBM receipt, you got a discount," she says.
Therefore, she insists that more policy mandates and enforcement are needed.
It is not yet clear whether the positive trend that Covid has promoted is a short-lived experience or whether the momentum of accelerated digital payments are likely to continue.
Eric Rwigamba, the Director-General of the Financial Sector Development at the Ministry of Finance and Economic Planning, strongly believes that is likely to be the case through 2021.
That is because consumers have understood the value of using digital payments.
"Any rational consumer looks at two things - convenience and cost. We are not doing well with cost (of transacting), but digital avenues bring about convenience," he notes.
The optimism is also based on the ongoing conversation to incentivize cashless payments, either through tax refunds or tax rebates both to businesses that accept digital payments and consumers that prefer digital avenues.
Other developments
The value of funds transferred via Mobile Money grew by 450 per cent between January and April this year to reach Rwf40 billion (over $ $42 million), according to data from Rwanda Utilities Regulation Authority.
This means that there was a sharp decline in the use of cash in payment of goods and services, a development that the government has been pursuing for years.
The development was among other things a result of a move by Central Bank and local telecoms to temporarily remove charges on transfers.
Analysis by Insight2Impact showed that with zero fees more people switched to mobile money transfers. With the number of unique subscribers, sending money virtually doubled from 600,000 in the week before lockdown to 1.2 million in the week after lockdown and 1.8 million people in the final week of April.
The weekly value of money spent digitally from mid-February to mid-April at merchant outlets increased 700 per cent further driving the uptake of cashless payments.
Cashless penetration is measured by aspects such as volume of transactions, usage, footprint of infrastructure such as point of sale machines, value of e-payments to Gross Domestic Product which as of October 2019 stood at 34.6 per cent.
The dominance of cash costs the government millions of dollars.
The cost of producing currency in Rwanda is estimated at $1.5 million annually while Rwandan banks spend between Rwf18 billion and Rwf20 billion annually handling cash.
Taxi-motos go digital
The pandemic pushed the government's plan to digitalise public transport, particularly for taxi-motos.
All taxi-moto businesses were directed by the regulator to acquire metres that allow passengers to pay digitally without exchange of cash in people's hands, a move that could have increased the uptake of cashless payment for transport.
For public buses, it has already proved that it works following the introduction of Tap&Go system. Previously, to secure a trip by bus out of the city involved making a prior trip to the bus park to book and pay a ticket. This was time-consuming and drove up costs for passengers involved.
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At the end of 2019, AC Group, a Rwandan tech firm enabling payment in public transport introduced an intervention to improve convenience through their Tap&Go intra-city solution.
The firm, which commenced digitizing payments in public transport buses in 2015, rolled out an inter-city solution at the end of 2019 to create a convenient way to book and pay for travel across the country as they do for city transport on public transport.
This allows users to book their tickets for inter-city travels from wherever they are using the Tap&Go Application.
With an estimated over 300,000 daily users of public transport in intercity routes, the system aims at improving efficiency and quality of services without driving up costs of operation.
Using the Tap&Go app, passengers do not have to make unnecessary trips to the bus park to book their tickets and can book their travels on their mobile phones from anywhere and just go when the time of departure comes.
This year, AC Group upgraded the system to taxi motos.
A passenger is now able to get information on current and upcoming trips, get on Tap&Go Ride (taxi moto), to get to the bus park and pay for all the options with one Tap&Go card.
The solution allows for consistent scheduling for every departure as well as real-time information on availability schedules per route and respective bus companies.
The solution also has options for booking a ticket online via the Tap&Go app or web as well as paying for tickets using cashless payment platforms.
Source: The New Times

THE Tanzania Livestock Research Institute (Taliri) has come up with a new technology to determine chicken body weight, which they say, will help farmers to sell their chickens depending on their actual weight unlike before.
The new tech was researched and developed by Taliri-Mpwapwa Centre scientist Mary Magonka.
Presenting the findings before a team of researchers and reporters during training coordinated by Tanzania Commission for Science and Technology (Costech) recently, Ms Magonka said chickens were sold on face value and not on actual weight, thus reducing farmers' bargaining power for price and market value.
With the new findings, farmers will now sell their chickens using scientific measurements to determine the weight, a move that will make them benefit from poultry farming after spending more time on it, adding that a marketing system would now be formalised.
According to Ms Magonka, the main objective of this study is to determine the relationship between body weight and linear body measurements of chickens and develop regression equations for predicting the body weight.
"At least 119 improved chickens (Sasso) aged 20 weeks of both sexes were involved in the study and 62 of them were roosters, while 57 were hens," she noted.
She explained that a simple and multiple regression model was used to measure the regression of body parameters on body weight.
The results, according to her, suggest that there is a positive correlation coefficient between body weight and other body measurements.
In addition, the findings suggest that the chest circumference and body length have high and positive correlation coefficient to body weight.
Tanzania is home to some 83 million chickens, according to the 2019/20 Agriculture, Livestock and Fisheries Census conducted by the National Bureau of Statistics (NBS).
According to the census, about 75.1 million chickens were owned by smallholders and 12.6 million chickens were owned by large-scale farmers. Zanzibar had 3.1 million chickens in the same period.
Some farmers say the new findings suggest that they are likely to improve the performance of their business.
Source: The Daily News, Tanzania.

Historic moment for African trade - South Africa readies for exports under new trade agreements with African Union countries and with the UK implemented from 1 January 2021
Today marks the start of preferential trade for South African firms under two new Trade Agreements.
They are with countries ready to trade under the African Continental Free Trade Agreement and with the United Kingdom under the SACU, Mozambique -UK Economic Partnership Agreement.
South Africa has put in place the legal and the administrative processes for preferential trade under the African Continental Free Trade Area (AfCFTA) on 1 January 2021 in line with the decision by the 13th Extra-ordinary Session of the Assembly on the AfCFTA on 5 December 2020 to start trading under the AfCFTA on the basis of legally implementable and reciprocal Tariff Schedules and Concessions, with agreed Rules of Origin.
The AfCFTA Agreement has been signed by 54 of the 55 African Union member states and thirty-four (34) countries have already deposited their instruments of ratification to the African Union Commission and have become State Parties. The current State Parties are Angola, Burkina Faso, Cameroon, Central African Republic, Chad, Côte d'Ivoire, Congo, Djibouti, Egypt, Eswatini, Ethiopia, Equatorial Guinea, Gabon, The Gambia, Ghana, Guinea, Kenya, Lesotho, Mali, Mauritania, Mauritius, Namibia, Niger, Nigeria, Rwanda, Saharawi Arab Democratic Republic, Sao Tome and Principe, Senegal, Sierra Leone, South Africa, Togo, Tunisia, Uganda and Zimbabwe. A number of the signatory countries have begun to put the domestic administrative arrangements in place to enable trading under the new terms. These should be progressively expanded within the next few months.
In addition, trade for local firms with the UK commences today under the new Economic Partnership Agreement between six southern African countries and the UK, replacing the European Union partnership terms for the UK market that was in place until 31 December 2020.
Minister of Trade, Industry and Competition, Ebrahim Patel today called on South African farmers and manufacturers to gear up for the new opportunities in export markets.
"Trade with the rest of the continent is a critical source of output and jobs growth. African countries recognize that industrialization is critical to the development of the continent. The new Agreement that comes into effect today will take some time to be fully operational but has the potential to be transformative for Africa, breaking our dependence on a neo-colonial pattern of trade that characterized trade. Our continent exports raw materials and imports finished goods, with substantial value added in the process," Minister Patel said.
"Covid-19 simply reminded us of the enormous price we pay for not developing advanced economies. This is Africa's moment to build resilient, innovative economies on the back of the large markets that the free trade agreement puts in place. It will take dedication and disciplined implementation over the next few years to fully realize the benefits," he said.
Minister Patel said that the Summit Decision to commence trade under the AfCFTA was historic and a milestone in the continent's longstanding efforts to integrate and industrialise.
"AfCFTA presents South African producers and manufacturers with an opportunity for expansion to new markets in West, Central, East and North Africa, and provides alternative markets for the export of value-added goods, as well as services. In addition, exports to the United Kingdom can continue seamlessly with the new agreement with the UK in place," Minister Patel said.
The UK Agreement effectively retains the terms of trade in the existing EU Agreement and will govern the bilateral trading relationship between each of the southern African countries (South Africa, Lesotho, Eswatini, Namibia, Botswana and Mozambique) and the UK.
Both the EU and the UK are significant trading partners for South Africa.
Source: allafrica.com

On January 1, 2021, the African Continental Free Trade Area officially took off. It is the culmination of interminable years of political momentum towards Africa-wide free trade. Nosa James-Igbinadolor looks at the place of Nigeria within the new free trade area
The African Continental Free Trade Area (AfCFTA), has finally taken off across the continent. Originally scheduled to kick off on 1 July last year, the coronavirus crisis, and other factors stalled the proposed take-off.
It was in March 2018 that African heads of state and government held an extraordinary summit in Kigali, Rwanda and agreed to establish the Free Trade Area.
The agreement to create the AfCFTA went side by side with the Kigali Declaration, which called for the "operationalization" of the AfCFTA and for the start of the more ambitious Phase II talks, which would cover competition policy, intellectual property and investment. A protocol on the free movement of people was also signed.
The AfCFTA, according to South Africa President, Cyril Ramaphosa, will boost intra-African trade, it will promote industrialization and competitiveness and contribute to job creation, and it will unleash regional value chains that will facilitate Africa's meaningful integration into the global economy. The AfCFTA will also improve the prospects of Africa as an attractive investment destination. It will help advance the empowerment of Africa's women, by improving women's access to trade opportunities which will in turn facilitate economic freedom for women, and expand the productive capacity of countries. "To support this, we must strengthen women's participation in the continental economy by ensuring there is greater public procurement earmarked for women-owned businesses. We must ensure that there is sufficient support given to women-owned SMEs and cooperatives in both local and regional economies," the South African leader emphasized
In addition to increased trade flows both in existing and new products, the AfCFTA has the potential to generate substantial economic benefits for African countries. These benefits, according to the International Monetary Fund, include, "higher income arising from increased efficiency and productivity from improved resource allocation, higher cross-border investment flows, and technology transfers. Besides lowering import tariffs, to ensure these benefits, African countries will need to reduce other trade barriers by making more efficient their customs procedures, reducing their wide infrastructure gaps, and improving their business climates. At the same time, policy measures should be taken to mitigate the differential impact of trade liberalization on certain groups as resources are reallocated in the economy and activities migrate to locations with comparatively lower costs."
The expectation is that services and goods should be flowing freely in and out of the participating countries, making the continent the biggest free trade area in the world.
The free trade initiative could create an integrated market with a total GDP of over $3 trillion, according to US think tank, Brookings Institution.
The AU says that the agreement will create the world's largest free trade area. It also estimates that implementing AfCFTA will lead to around a 60% boost in intra-African trade by 2022.
The continent currently lags behind other regions of the world in terms of continental trade. According to the African Development Bank (AfDB), intra-Africa exports amount to only 16.6% of total trade.
In 2018, the African Export-Import Bank reported that only 15% of international trade by African countries takes place within the African continent. This percentage compares unfavorably with other continents such as Europe (67%), Asia (58%) and North America (48%).
In July 2019, Nigeria finally signed the AfCFTA after pulling out days before the agreement was due to be signed in March 2018. President Muhammadu Buhari said he needed further consultations in Nigeria.
Trade within Africa is dominated by trade within regional blocs and not trade between regional blocs, therefore, most trade and investment takes place close to home.
Intra-regional trade in sub-Saharan Africa is currently very concentrated, with some 66% of the regional demand for intra-regional exports accounted for by just 10 countries, including Côte d'Ivoire, the Democratic Republic of Congo, South Africa and some other Southern African countries
Tensions continue to exist between smaller and larger states across the continent when it comes to trade and market access. This is because the possible forward and backward linkages between their economies - the creation of transborder value chains - have not yet been established.
As noted by Professor Carlos Lopes of the University of Cape Town in 2018, "once studies have been done, it will be possible to establish which countries can specialize in which elements of which supply chains. For example, the South African car industry uses leather, but South Africa is not a major leather producer; but other African countries could supply the leather. So, the key is to establish these linkages. Once the agreement is ratified, the opportunities will emerge."
For Nigeria, the prospects for increased trade across the continent represents an opportunity to expand its balance of trade as well as its balance of payment.
The country's trade with the other countries that belong to the Economic Community of West African States (ECOWAS) remains poor--as do aggregate trade flows among all the ECOWAS member states. The vast majority of Nigeria's exports to the ECOWAS are mineral fuel and oils, agricultural and manufacturing forming a miniscule percentage of the country's exports to the sub-region. The figures are even more dire when it comes to trade across the wider continent.
Simply put, Nigeria is not doing much trade with other African countries and the AfCFTA represents a veritable opportunity to expand trade, grow the economy and engender development.
The service sector makes up 65% of the world's output and over half of Nigeria's economy, and as Gbemisola Alonge noted in Stears Business, "for Nigeria to fully reap the benefits of a closer Africa, it needs to think beyond the ancient focus on goods and position itself to win in the services game. The service sector is an escalator for new economic growth in Nigeria and plays a more significant role than industry in the economy through its contribution to Gross Domestic Product (GDP), capital imports, and employment.
In August, just a few months after celebrating its signing the AfCFTA, Nigeria imposed a ban on the movement of all goods from countries with which it shares a land border: Benin, Niger and Cameroon, effectively banning all trade--import and export--with its neighbors. The border closure has impacted Nigerian consumers and exporters with traders being refused entry of goods, even those for which they have already paid customs duties, and consumers facing inflated prices of imported food products--with some products having doubled in price.
The closure of the Nigerian border went against the spirit, and the letter of the AfCFTA, and as noted in a Brookings Institution report, is "inconsistent with its 44-year long commitment to the Economic Community of West African States (ECOWAS), West Africa's Regional Economic Community which Nigeria spearheaded in 1975, and is one of the eight building blocks of the AfCFTA. Under the ECOWAS Protocol, member states committed to the establishment of a common market, including through the liberalization of trade by abolition, among member states, of customs duties levied on imports and exports, and the abolition, among member states, of non-tariff barriers in order to establish a free trade area... Specifically, all 15 ECOWAS countries are committed to eliminating customs duties, quotas and quantity restrictions and accord each other most favored nation treatment."
Supply side constraints such as the current government's topsy-turvy macroeconomic and monetary policies as well as underdeveloped physical and institutional infrastructure remain a threat to Nigeria's effective participation in and efficient derivation of critical trade and economic benefits from the AfCFTA. Thus, while market access is there, supply-side constraints limit the country's ability to respond to the opportunities inherent in the AfCFTA and remain a barrier to Nigeria's competitiveness.
Nigeria's inability to take advantage of the US designed African Growth an Opportunities Act (AGOA) might be pointer to the country's ability to take advantage of AfCFTA.
The AGOA project initiated by the United States of America in 2,000 was to help develop trade and facilitate exporting over 6,000 goods into America with no tariff. The trade agreement primarily set out to galvanize the African economy.
Though AGOA programme has been on for the past 20 years, Nigeria has never taken full advantage of the potentials due to its overreliance on oil. The country is said to have exported goods worth less than $10 million to the U.S under the programme in 20 years.
It is pertinent that Nigeria responds to the opportunities presented by AfCFTA by designing policies and promote market access for Nigeria's exporters of goods and services, spur growth and boost job creation.
It is also critical that the country moves swiftly to eliminate barriers against Nigeria's products, spur the industrialization of the country by providing an expanded platform for Nigerian manufacturers and service providers for connection to regional and continental value chains, improve competitiveness, and stimulate increase in exports of goods and services across the continent. The government must also provide a platform for Small and Medium Enterprises (SMEs) integration into the regional economy and accelerate women's empowerment.
Source: This Day