Diane Karusisi, CEO of Bank of Kigali discussed with Emmanuel Daniel, Rwanda's current economic boom and its development path over the last 20 years. With the changes happening in this east African country, it shows that Rwandans manage to grow and become better. She believes that “its possible to transform Africa into a better place for Africans”.
She described how visionary leadership and an efficient government has transformed Rwanda from an agrarian nation to a service-led and knowledge-based economy. The country is now compared to Singapore for its infrastructure development despite a per capita gross domestic product (GDP) of less than $1,000.
The following key points were discussed:
The following is the edited transcript of the interview:
Emmanuel Daniel (ED): Hello, everybody, wherever you are watching this conversation that I'm about to have, let me first ask what is your impression when I say, the country, Rwanda? If like me, you've heard that Rwanda today is the Singapore of Africa, or to be more polite with the person, I'm going to be speaking to, the Switzerland of Africa.
Let me tell you this, when I came into this country, everything I've experienced, to say is that, that perception is true. It's an amazing journey that this country has made from where it was, to what it is today. And very clearly, to anyone who comes and visits Rwanda, you will see that this country is on the verge of a takeoff.
The person who is in the best situation of all, to give me a perspective, or give us a perspective of this takeoff is Diane Karusisi. And for three very important reasons, Diane is the chief executive of the largest bank in Rwanda, the Bank of Kigali. She was the chief planner, the chief economist at the presidential palace, and she herself is a Rwandan who's come back from a very privileged, growing up outside of Rwanda, to be part of this story. It's my great pleasure to be able to capture that story of Rwanda, in the person of Diane Karusisi.
Diane, thank you so much for speaking with me today. Before we talk about banking, I want to ask you some questions that are playing in my mind, because I'm unable to reconcile what I see to be what Rwanda should be a $10 billion economy, $700 to $800 per capita. And what I see on the streets, in the infrastructure that the country has built is first of all, infrastructure in many cases, in many places, in many ways. And the integrity of the social system, the fact that the streets are safe, the fact that the judiciary works, the fact that corruption is low, and a lot of the money goes into the infrastructure being built. This is an amazing story of the development of its economy. At the same time, I get the impression that, or rather the data, the statistics tell me that it is still a cash crop agriculture economy, and wanting to build a service infrastructure and so on. So, just give me a sense for a start of this conversation, where is Rwanda in its evolution?
With GDP per capita of less than $1,000, Rwanda delivers better infrastructure development
Diane Karusisi (DK): Thank you. Thank you, first of all, Emmanuel for letting me share my journey and sharing, my experience living in Rwanda, with your viewers. Rwanda is - when you look at statistics as you say, Rwanda is a small economy, still a poor economy, with 25% share in agriculture. We still have a long way to go. But Rwanda, has a visionary leadership and a very competent government. I might say, we have a first world governance, although it wouldn't even be right because we are able to achieve so much with so little, when some countries in the first world can achieve things, but they have so much, right?
We have a first world or a very competent, brilliant government. And that's why you see this disconnect between, the safety you see here, the organisation predictability, cleanliness is something that most people mentioned, when they come to Kigali, the visitors for the first time. You're able to see all these but at the same time, look at statistics and you only see less than $1,000 per capita GDP.
I believe we have a very strong government and has put in place the right foundation, as you say, for the country, and the economy to takeoff. I'm very bullish about that, I believe what you see today, you can multiply about 3,4,5. In the next five years, we'll have probably $3000, $4.000, $5000 per capita GDP.
ED: In the time that you were the chief economist in the presidential cabinet, what were the priorities that the government set for itself?
DK: We have a very pro-people government. And again, this is why I say, we have a first world government, although again, it's not doing it justice. It's very pro-people, and very visionary. So everything is done to make sure we can transform from an agrarian economy, to a service-led, knowledge-based economy. This is happening because the way the priorities are set, the way all the activities and programmes are coordinated, really show that things can happen at a very fast pace. So, of course, education is key, because we have, 12 million to 13 million people. We have more than half below 20 years of age. So education is absolutely critical because we believe it's the best resource. Human beings are our best resource in Rwanda. We are not resource-rich. We don't have oil, we don't have diamonds, but we believe Rwandans are the best resource that we can have. And that's why we're putting a lot into education and health. You can even tell the management of the COVID crisis, was also first world. We have probably the highest levels of vaccination in the world, akin to those in the West, Europe and America, yet, we're still a very poor country.
I believe the focus on people is critical. Apart from that, the government has put a lot of effort into improving ease of doing business, transparency. Corruption is something that does not exist in Rwanda. This is very important as the right foundation for us to takeoff as an economy. The government has also been building the core infrastructure you've seen roads. Electricity. when you look at the rates of electrification in the country, when I moved back to Rwanda, in 2009, it was below 20%. And today, we're talking about 70%, which happened in a very short period of time. So, basic infrastructure is also being set up, road network, electricity, water, etc. These are the right foundations, the right people, education, health, the right systems in government, lack of corruption, transparency, ease of doing business, also the brakes, infrastructure, these are the foundations for us to continue transformation for an economy.
ED: And this is for a government who has received the funding, not taxation at the moment. What is the liability side of the balance sheet look like for the government?
DK: When you look at, again, we've seen improvements over time, 20 years ago, 15 years ago, we're still big recipients of donor money, grants, etc, from countries from large multilaterals. Today, we've moved to an economy, that is a government, that is financed to a large extent by actually tax receipts, which shows that the government knew from the beginning that it was not sustainable to live on donor money. So we've seen this, I don't have the numbers, but you can find the numbers anywhere online. And today, the tax base has been increasing with all these small businesses.
Bank of Kigali financed some of the government’s projects
Companies like Bank of Kigali, we are among the largest taxpayers. We are proud of financing the government because we see the results on the road. You travel or you visit Kigali, you'll find new roads being built, new housing units being built. So it's you really see that the tax pay is..
ED: It's being used, it's being translated. What is your personal thinking on aid-driven economies? I want to just capture that a little bit, because in Africa right now, there are many voices, talking about what aid should be and how aid had affected the growth of or rather, disrupted rather than helped the growth of Africa?
DK: Of course, aid is something that can be good. But in most countries in Africa, it has not been good.
ED: And what was the difference for with Rwanda?
DK: We got aid with a lot of accountability and accountability not only to the donor, but accountability to the people of Rwanda, because it was important for us to make sure that we are able to report back and say we've received this much aid, but this is what we've built for our people. What our government has done well - again, I cannot speak for the government, was to make sure all the aids money that would come would finance our priorities. Priorities of the people of Rwanda not the priorities of some external powers and we've seen it. In the past 20 years, all this money, we can see it in infrastructure being built, the systems being built, and this is what makes the development journey sustainable. Because over time, we're now weaning ourselves off aid and letting our government finance by domestic revenues, and we believe things are going to only get better in the future.
ED: I've now met a number of senior people in Rwanda, the international financial centre, Rwanda international financial centre, Rwanda economic development board, all of which is very familiar to me, because I come from Singapore, and Singapore in 1965, was exactly that --set up our economic development board go out, and lure investors to come in and provide the capital for growth and so on. Like Singapore in 1965, many of the senior people in government as well as in large corporations, like the Bank of Kigali, are young, and many returnees could have had the choice of a good life somewhere else.
Give me a sense of why you came back? You are a university professor in Switzerland, and then you are in Credit Suisse in asset management. That's an amazing career and so what brought you back to Rwanda?
DK: It's the desire of doing things or contributing to something bigger than just your own career. Be a journey.
ED: Were you lured back? Or did you just…
DK: Somehow, yes, but mainly because as a Rwandan, I'm always proud of saying, I come from Rwanda, because of the great things that were being said about my country. I also come often for holidays to spend time with family and always amazed about the progress I would see every six months or every year. I felt, you can work, you can have a very good career, but you always feel like you're small, like a drop in the ocean, and not really having an impact. Moving back allows you to feel that you are contributing to something bigger. And I don't speak for myself. Many of my colleagues here, the people I've worked with in the past, have come back from the US, Europe, Asia, etc., because we really believe in the story, and the journey that we are on and we want to contribute.
ED: Now, when you came back, there was no promise of big jobs and big responsibilities, right? You have to sort of make it work for you.
DK: Of course. I mean, you come back with the passion and the willingness to serve and to contribute, but you have to work your way up where you want to be eventually. When you do the right thing, you have the right values, probably also able to have bigger responsibilities. I hope that I won't disappoint the people.
ED: Well, from what I've seen, you've done a very good job at Bank of Kigali. Now, at which point did, were you kept from being a statistician and an economist to actually running a business? How did that opportunity come?
DK: My background is in econometrics and statistics. When I came back, it was very natural for me to contribute in area where I had some technical expertise. Now, I moved to that position because we had run large surveys and the census, giving the country the right, evidence and data for planning. So, from that position, I moved to the Office of the President where I was supporting the designing of policies, etc. The knowledge of the country I had acquired in running, these surveys, etc. was very relevant then. But, I came from banking, although it's not commercial banking, it was the asset management at that time. I was always interested to understand how the financial sector was developing here. So, serving still on the board of the second largest financial institution. I wanted to be acquainted to understand what's happening, and to see if I can contribute to the knowledge, with ideas, etc. I kept a connection sort of with the banking sector, and that's how I was able to come back.
ED: What was Bank of Kigali when you first started engaging with it? For a small economy, I mean, without even looking at the balance sheet, I would say that it will be five or six corporates make the biggest asset base and retail doesn't even feature, and the culture would be very entitled and very slow.
Every year, the bank will give out loans to its five best clients, and then you're done and that's what I imagined. A state-run commercial bank would be in any other country, right? What was the state-run commercial bank that you inherited? What were the targets that you set for yourself?
DK: It was probably a little better than that you envision although, the challenges were there. A culture that is quite, not entitled, but comfortable, with doing business with some large corporates, and trying to do some business with the small and medium-sized enterprise (SME) and retail segments. What I brought was to do things differently and to think digital, because I believe this is the only way for us to scale. I mean, digitalisation is giving us, Africa an opportunity to leapfrog. And when I came, my agenda and it was supported by the board rules, let’s digitise so, we entered a huge programme of digital transformation to get going infrastructure in core applications.
We implemented new systems, etc. because we believe we want to provide financial services to everyone, anywhere, but on the mobile phone. And this will help us reach millions of Rwandans that we cannot serve. If they all have to come to our branches. So, this has been the journey. It's not easy, it's very difficult. Digitisation is beyond just implementing new products or new applications. It's also very cultural. Having teams that are agile, working together, stopping the silo mentality. This is a big part of what I've learned in my journey in Bank of Kigali.
ED: Bank of Kigali has probably about 400,000 retail customers, right and the country's population is 13 million, around there. That's a huge gap in bringing more people into the financial sector, and onboarding the bottom of the pyramid, the unbanked and so on. And as you do that, the balance sheet of the bank starts to change. And as the balance sheet of the bank starts to change, the funding base of the country starts to change because if you're able to mobilise the financial resources, or at the intermediation level, the country becomes more self-sufficient and stuff like that. Where is Rwanda in that journey, and where is Bank of Kigali in that journey?
DK: I agree with you 100%. For us to do effective intermediation, we need to have millions of customers. Because today, and that's something that differentiates us from countries in East Asia when they were in the same development trajectory, is our savings rate.
We don't have enough long-term savings. And for us to do effective intermediation, we need to have a pool of savings, that is one, long-term as much as possible. Second, diversified as much as possible, so we will be able to allocate it to investment and we can invest in long-term projects in many sectors of the economy.
For us to create wealth, jobs, etc. So, that's why it's critically important for us to be able to reach pretty much every single Rwandan, not only offering transactional banking services, but offering savings products, insurance products, life insurance. Because these are all long- term savings products that will help us finance the asset base of our balance sheet, and as much as possible, long- term facilities in local currency for SMEs and corporates.
Today, we still rely a lot on development finance (DFi) funding. These are development financial institutions from the region because we need to fill that gap in our funding, because we need long-term funding for us to finance the economy. And I believe as we grow the balance sheet, as we become a bit more sophisticated and offering targeted products for all segments of our clients, we will be able to have a diversified funding source, long-term as much as possible that will help us further support the economy.
ED: As CEO, how much of your mental bandwidth is spent on assets of your top clients, and how much of that is spent on diversifying and building the intermediation base? Because that's nuts and bolts stuff, that's street-level stuff, that's transaction problems, throughput and this and that. It sort of changes you, from an economist to a banker in a traditional sense, and then a transaction banker. Just describe to me what you've been learning in that process.
DK: I'm a very hands-on person. So, as much as I want to spend some time on strategy because when I joined, we started to diversify into new products, insurance. We started insurance, investment banking, fund management, etc. As much as it's important for me to think strategically. Also very much like…
ED: Every day is a problem.
DK: I would always like to go and meet the client. We have regular sessions, where we go up country, we meet with business people, we call them opinion leaders in these regions, just to understand what they're up to, what their ambitions are. And we keep telling them that we want you to tell us what you want, and we'll help you achieve whatever you want.
ED: What are they saying? Because a lot of them would be in another country, they will be considered small businesses, and yet, they might be a middle market for you by now and maturing, what are your clients telling you?
DK: Of course, they are also very transactional, sometimes when you meet them, they'll tell you.
ED: Their problems are transactional?
DK: Yes, they have very basic problems. They want longer-term funding and they want us to reduce our collateral coverage because sometimes they'll want significant collateral to cover our risk. They want us basically to look to increase our risk appetite. This is very transactional. But what we also tell them is to see them together. Because sometimes the transaction costs of dealing with very small businesses are high. Sometimes we tell them to come together, have a big project that will really transform your city or your village. And we see that coming along, we have a lot of business people that are coming together to set up big projects, in logistics, in real estate, etc. And when you go to a city, you actually see change, and this is very fulfilling.
ED: What are the milestones that you have given yourself? What would you feel will make it look like you've achieved something? Short-term milestones and maybe your long-term milestone in the institution.
DK: So, my short term, milestones are, first of all, to reach more people. I have a hard number, I want to reach a million clients, retail clients. That's something that is very achievable in the next year or two, with the work we're doing.
My other milestone, and this is one key performance indicator (KPI) that I get from the board is to diversify my sources of income. Today, I still rely on interest income, 80% of my income is still interest income. So, I want this number to be reduced to 60% so I can enjoy more commission income, premiums coming from our insurance, business, etc.
Our vision is to become a one-stop centre for all financial services in the city, in the country. And we want to be able to offer all our products on the phone. We want a business to say, I can apply for a loan, an insurance policy for my car, my assets, etc. All this on the phone, and we believe these are the things that you can achieve.
ED: Is there a desire to dominate the financial sector as in do as much as possible in-house rather than with partners? In insurance, for example, do you see yourself being a supermarket of insurance products, leaving it to other players to build an insurance industry? Or does Bank of Kigali want to become a group structure where you become dominant and hold? I'm asking this question because you are right at that phase in the evolution of your financial structure of the entire country to dominate and yet after you dominate, you realise that your cost structure starts to get on you and you rather buy products into, build them yourself and stuff like that. Just give me a sense of how you're thinking about this.
DK: I believe we already have somehow a dominant position and we already set up a group structure. And the group is the one that is listed on the stock market and is an investor. It's a holding company that invests in subsidiaries. As we speak, now we have four subsidiaries. This year, we want to set up a life insurance business, because we believe being a locally sort of owned company is a competitive advantage to us. When you look around, most banks are efficient in nature, with headquarters, either in Morocco or in Kenya. Ecobank is headquartered…
I really believe decision-making is so far away from our contexts. And we have the advantage of taking leaps here and understanding the context of this country, much better than any of our competitors. That's why many of our products are built here in-house. The app through which we are transacting on is built by our people, because we want it to be evolving with the needs of our clients, not just buy products, and implement the product that will constrain your growth. What we want is to become, again, a household name, which we are already in some sense, but the go-to place for anyone who wants to have the best financial services.
ED: As the CEO, which institutions outside of Rwanda that you look at for inspiration as something that you would like to become, or may they’re doing something that's right, that you'd like to learn from. I mean, I'm sure there are several.
DK: Today, to be honest, most corporate leaders like me would look at these digital giants. Just the most impressive, when you look at the growth, the non-risk income, gross income, it's amazing, it's unbelievable. The likes of Google, or Netflix, or all these digital giants that will just exploit the data, they have to sell more. This is very inspiring. I believe that we, as a financial services company, we are becoming also to a large extent, a technology company that happens to do banking, to do insurance, etc.
Young population, who are mostly digital savvy are the best resources of Rwanda
And that's why I want to ask, we are investing heavily in technology because we believe that it's the only way for us to scale and to be closer to our clients. Because again, we are a very young population, 50% of our people are less than 20. All these people are very digital savvy, and they won't come to the branch, they want things real-time immediately and with the right experience.
ED: The answers that you've given me so far, are very corporate answers, because your responsibility is to the institution, Bank of Kigali. But I've seen so much talent out there. A lot of young people, and the innovations that they're bringing in place, may well make finance look very different from what it is today.
At the same time, at a personal level, you’re an inspiration yourself, being young, and having held this responsibility, and inspiration that you can provide to the young people, to women out there. What do you have to say to the talent pool that exists outside in the streets in Kigali in Rwanda? How do you connect what you're doing with the bank with what needs to be done in the street?
Uplifting lives to lead a successful transformation of Africa
DK: We have a number of programmes that we implement within the bank as part of corporate social responsibility (CSR) to support entrepreneurs, to support women in business. But, just being a woman leader leading the largest financial services institution in the country, itself, say something. It tells young girls, boys, people of Rwanda that everything is possible. I see it as a responsibility, I really have to do it well because of people who are looking up to me.
I believe that we have historic opportunity as Rwandans because of everything that's happening. A lot of great things are happening here from little bits from nowhere from nothing, showing that it's possible to transform Africa into a better place for Africans.
I believe that we have to seize this opportunity as young people have a passion. They pursue some activities that create small businesses, they enjoy working in enterprises. I just want to tell them, you have to keep betting, do your best. Because beyond just random, there are many people on the continent looking at us, and saying, if these people manage to grow, transform and develop, maybe it's possible. I'm hoping that we are in a place where we take advantage of all the opportunities we have to inspire.
ED: You are already as a country and as a people an inspiration to the rest of Africa, and definitely an inspiration on a global stage. I really wish you well, and I hope that this conversation is something that will be continued and that we will have reason to celebrate what Rwanda has become today. It's been a pleasure meeting you.
DK: Thank you. It's a pleasure having this conversation.