Economy

High interest rate charged by banks hampers Burundi economic development, expert says

“The interest rate applied by Burundian commercial banks is considered high and this may lead to the risk of default on the loan,” said Dr. Janvier Désiré Nkurunziza, an economic expert in a debate conference organized on April 24 by the Association of Banks and Financial Institutions [ABEF].

Dr. Janvier Désiré Nkurunziza: “The interest rate applied by Burundian commercial banks is considered high and this may lead to the risk of default on the loan”

He believes that the application of accessible interest rates will encourage more entrepreneurs to develop their activities. He also says only 7% of the Burundian population use banks adding that that very few credits are allocated to the agricultural sector while more than 90% of the Burundian population live on agricultural activities.

Mr.Nkurunziza says agriculture represents 40% of GDP. “Agriculture is the preferred sector of Burundi’s economy.” He calls on financial institutions to increase the amount allocated to this sector.

Léonard Sentore, Director of the Investment Promotion Agency is worried that entrepreneurs who obtain credits from banks at a rate of 20% cannot pay their debts after paying 30% of taxes. “Entrepreneurs are reluctant to apply for credits because of this high interest rate,” he says.

Audace Bukuru, chairman of ABEF reassures that the Central Bank is developing a financial regulation that will set an interest rate that will not be exceeded. He believes that the regulation will be issued by June.

error: Content is protected !!