Rwandan Consumers Show Optimism and Resilience Despite Financial Strain

• The TransUnion Q2 2024 Consumer Pulse Study shows that Rwandan households are facing a complex economic landscape, yet their outlook is positive
• Consumer behaviour suggests a shift toward more cautious financial management strategies, possibly in response to economic uncertainties.
• The demand for credit remains high, and consumers are keenly aware of the importance of monitoring their credit reports

Information and insights company TransUnion has published its first Consumer Pulse Study in Rwanda, which shows that Rwandan consumers are navigating a complex macroeconomic landscape resulting in financial disparities amongst households.

Within this context, Rwandan households saw varied impacts on their incomes in Q2 2024. While 33% of respondents said their incomes had increased in the previous three months, 25% witnessed a decrease in income and 42% noted no change. Employment expansion in late 2023 reduced the unemployment rate to 16.8% and, during Q2 2024, 22% of consumers surveyed started a new business and 21% started a new job leading to increased income. However, job losses (28%) and salary reductions (18%) caused income declines for many respondents. On an encouraging note, 81% of Rwandans are optimistic that their income will increase in the coming year.

Sam Tayengwa, CEO of TransUnion Rwanda, says: “Rwandan consumers are showing remarkable resilience in the face of financial challenges. While many are experiencing financial strain, their optimism about future income prospects and the proactive steps they are taking to manage their finances is encouraging.”

Consumer response to economic strain

Inflation, a lingering concern for nearly one in ten (8.9%) of households in Q4 2023 decreased to just below one in twenty (4.6%) in the first four months of 2024, mainly due to reduced food inflation. This is expected to ease financial pressure on consumers and support household spending in the second half of 2024.

However, strong GDP growth of 8.2% in 2023, driven by robust household spending, is expected to soften to 7% for 2024, with risks of adverse weather impacting food production, in turn leading to higher food prices and adversely affecting impoverished households. High energy costs and persistent poverty present additional challenges.

The ability of consumers to meet their monthly bills is strained with 42% expressing concerns about fulfilling their existing financial obligations, of which 44% are Millennials (27–42 years old). Of the consumers who are unable to pay their bills and loans in full, 37% plan to seek assistance from friends or family; 35% intend to make partial payments; and 33% will dip into savings to cover the shortfall.

Economic and financial pressures led to 35% of respondents reducing spending on discretionary ‘luxuries’ like dining out, travel, and entertainment in the last three months. There is a focus on the future, however, some respondents prioritised debt repayments and some increased contributions to emergency funds during the quarter (both at 28%). A trend towards responsible financial management is evident, with 49% planning to allocate more income toward bills and loans going forward.

Financial inclusion

Despite a high demand for credit and 98% emphasising the essential role that credit plays in achieving financial goals, just 37% feel they have sufficient access to credit and lending products (particularly Millennials at 42%).

During Q2 2024, 51% of consumers planned to seek new credit, with Millennials showing the most interest (60%). However, of the 49% who abandon plans for new credit or refinancing over the quarter (27%) cited high costs and concerns about income and employment stability.

Among those who intended to seek credit, 44% contemplated new personal loans, 38% considered student loans and 17% planned to apply for a new home loan.

With the Central Bank of Rwanda cutting its policy interest in May 2024 – for the first time since 2020 – and, despite the relatively high bank lending rate (15.9% in April), this move will likely stimulate credit demand over the next year.

Monitoring credit reports

When it comes to credit monitoring, 96% of Rwandans recognise the importance of checking their credit reports. Among the respondents, 64% monitor their reports at least monthly, and this is highest among Millennials (69%), which correlates with this age group’s perceived access to credit.

Overall, nearly half (49%) think that including non-traditional information like rental payments, gym memberships and short-term loan histories in credit assessments would boost their credit scores.

Digital fraud and security

Rwanda’s ecommerce penetration remains low, with 65% of consumers conducting less than half their transactions online, primarily due to limited internet access and security concerns. Digital fraud is a growing threat, with half (50%) of respondents being targeted by online, email, phone call or text message fraud schemes but not becoming a victim in the last three months and 11% targeted and claimed they fell victim.

Money and gift card scams were the most prevalent fraudulent scheme of those targeted, affecting 44% of respondents, followed by vishing (28%) and money mule scams (26%). In Q2 2024, 69% of consumers in Rwanda were concerned about sharing personal information, with identity theft (67%) and invasion of privacy (64%) being primary concerns.

“This shows the importance of transparency and accountability in data collection and utilisation by businesses and institutions. At the same time, consumers should check their credit reports regularly. Early detection of fraudulent activities that affect their credit scores enables consumers to take timely corrective action,” says Tayengwa.

Consumers can find out more about TransUnion Menyesha here.