Rwanda cen­tral bank pays govt div­i­dends

The East African - - THE MARKET WHISPERER -

Rwanda’s cen­tral bank — the Na­tional Bank of Rwanda (NBR) — has paid the gov­ern­ment a div­i­dend of Rwf237 mil­lion ($277,300) de­spite a 62.7 per cent drop in profit.

The bank re­ported a profit of Rwf677 mil­lion ($792,300), down from Rwf1.8 bil­lion ($2.1 mil­lion) with the de­cline at­trib­uted to ex­pen­di­ture on soft­ware li­cences and staff costs

“The net profit ex­clud­ing for­eign exchange reval­u­a­tion gain fell by Rwf1 bil­lion ($1.17 mil­lion), largely due to pro­vi­sion for Or­a­cle li­cences over the past three years and an in­crease in staff costs due to new staff re­cruit­ment,” said NBR in its an­nual re­port.

NBR also books un­re­alised reval­u­a­tion gains of Rwf21.2 bil­lion ($24.2 mil­lion) aris­ing from an in­crease in its for­eign cur­rency re­serves as a re­sult of the de­pre­ci­a­tion of the Rwanda franc against in­ter­na­tional cur­ren­cies by six per cent.

NBR be­comes the first cen­tral bank in the re­gion this year to con­trib­ute to gov­ern­ment rev­enues after Kenyan and Ugan­dan reg­u­la­tors de­clared nil div­i­dends.

The Cen­tral Bank of Kenya has not paid div­i­dends to the Trea­sury in the past five years, de­spite mak­ing prof­its in three years dur­ing that pe­riod.

The law al­lows CBK to re­tain 10 per cent of its prof­its but does not man­date that it pass the sur­plus to the gov­ern­ment.

Bank of Uganda posted a loss in the just con­cluded fi­nan­cial year and so could not pay div­i­dends

The cen­tral bank in Rwanda is man­dated to pay the Trea­sury as div­i­dends all sur­plus after ex­penses and al­lo­ca­tions to spe­cial re­serves.

Thirty per cent of the div­i­dend is, how­ever, re­tained by the bank for set­tling na­tional debt that was out­stand­ing be­fore 1997.

This year, Rwf203 mil­lion ($237,500) from the div­i­dend was used to pay the con­sol­i­dated na­tional debt, which now stands at Rwf37.5 bil­lion ($43.8 mil­lion) down from Rwf43.4 bil­lion ($50.7 mil­lion) in 2002, when it was con­sol­i­dated. NBR also re­tains 20 per cent of its op­er­a­tional prof­its in a gen­eral re­serve ac­count and 15 per cent in a so­cial wel­fare fund.

Ques­tions on whether bank­ing sec­tor reg­u­la­tors should pay div­i­dends to the gov­ern­ment linger, es­pe­cially in sit­u­a­tions where the reg­u­la­tors are deemed to be ben­e­fit­ing from mar­ket con­di­tions at the ex­pense of the pub­lic.

Crit­ics of the pay­ment of div­i­dends ar­gue that the sur­plus should be put in re­serves to smoothen tur­bu­lence in the bank­ing sec­tor.

Pic­ture: File

Rwan­dan cel­tral bank re­ported a profit of $792,300.

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