The Central Bank in Rwanda has announced the removal of fees for small digital transactions as well as a review to determine appropriate fees for digital payments. Both of these measures were recommended in IPAR-Rwanda’s recent policy brief on e-Commerce. This blog sets out IPAR-Rwanda’s approach to creating evidence and dialogue to influence policy and impact lives of citizens.
IPAR-Rwanda is a leading policy think tank formed in 2008 with a vision to become an independent recognized Centre of Excellence on policy analysis and research in Rwanda and beyond. It is running a project to provide timely evidence and develop policy recommendations to support the socio-economic recovery in Rwanda after the impact of the Covid-19 pandemic.
The project covers a wide range of issues, from the impact on poor households to Covid-19’s effect on large businesses. It is built around high-quality primary research conducted by IPAR-Rwanda – conducting three waves of a business and household survey, probing the impact of Covid-19. However, the end-goal of this research is to influence policy. IPAR-Rwanda has considered a strong focus on advocacy and policy influencing activity throughout the project.
The blog explains how the influencing plan for e-Commerce policy was developed. It highlights the benefits of engaging seriously with the challenges policymakers are facing. By taking the current policy landscape as the starting point, and engaging with the practical difficulties that decision makers worry about, policy development and recommendations can more easily “go with the grain”. As a result, research and advice is more likely to have an impact on policy.
Lesson 1 : Issue selection – choose something that is, or could be, a government priority
We chose e-Commerce as an area to focus on because it aligns well with existing government priorities. For example the Government of Rwanda is committed to moving towards a cashless society through a world-class payment system. On top of this, it has already pioneered the use of electronic government services through its Irembo platformand has ambitions for cashless innovation-friendly financial services.
Lesson 2 : Develop recommendations by combining evidence with the realities of the local context
To develop policy recommendations appropriate for the Rwandan economy, we combined the international evidence on policy best practice with primary data. We conducted a survey on businesses across the country which examined what the impact of Covid-19 has been, as well as what businesses have done to adapt to the economic crisis.
An emerging finding is that transaction fees were a significant barrier to e-Commerce in Rwanda. Other countries demonstrated that low fees – particularly on small transactions – could be effective at stimulating e-Commerce and economic activity more generally. There was evidence that this would be effective in Rwanda too, for example to reduce the spread of Covid-19, the National Bank of Rwanda cut fees during lockdowns. This led to increases in the amount of money transferred through mobile money by 450% while the number of people conducting transactions rose by 200%.
Lower transaction fees would have the three benefits of (i) increasing e-Commerce, (ii) increasing economic activity more generally, and (iii) delivering on the Government of Rwanda’s ambition of moving towards a cashless society.
Lesson 3 : Pay attention to policymakers’ perspectives and views and adapt recommendations based on feedback
With a set of recommendations based on robust evidence and tailored to the context, IPAR-Rwanda presented initial findings to key policymakers and key stakeholders relevant to the policy area. Framing our recommendations as potential options and welcoming feedback meant we got excellent insights on how to refine the proposals further. One example was to link the study findings with government plans to increase online public services which would be a good opportunity to improve digital literacy and trust in online systems which would indirectly boost e-commerce.
Lesson 4 : Disseminate final recommendations to key decision makers
After adapting our recommendations to reflect practical challenges that policymakers faced, IPAR-Rwanda presented them to key decision makers from government. Invited were representatives from across government, the private sector, and other research organisations. This included officials from the Ministry of Trade and Industry, who are responsible for the direct policy area and had been consulted throughout the policy development process.
Invited were also key decision makers in central government institutions, including the Ministry of Finance and Economic Planning and the National Bank of Rwanda. Engaging with these decision makers was important as they have contributed directly to design and implementation of national strategies and budgeting processes. It also allowed us to demonstrate how these recommendations could have impact beyond their individual policy area. For example, we explained how these could support government’s wider strategy for economic growth and shift towards a cashless society.
The recommendations have been well received. Fees on transactions under 4,000 Rwandan Francs (Rwf), around 4 USD, have been removed. As a very rough illustration, this could mean an increase in income of around 16,000 Rwf, or 16 USD, a year for someone working as a moto driver in Kigali if they did 20 trips a day at an average of 1000 Rwf per trip.
The Central Bank has also committed to undertake a study to determine appropriate charges for digital payments and has waived charges incurred when transferring funds from one’s bank account to their mobile money wallet and vice versa (push and pull charges).
Finally, the Ministry of ICT and Innovation have begun another Connect Rwanda campaign to distribute smartphones. This is being conducted in partnership with industry and linked to demand for services, particularly in the agriculture sector. Together these are all positive steps for increasing e-Commerce and supporting economic growth more generally.
While lessons will apply differently across countries, the example shows how effective think tanks can influence policy development processes. By harnessing local knowledge and networks, combined with a rigorous approach to evidence, think tanks are uniquely placed to provide practically useful advice direct to decision makers. As a result, policy think tanks can highly influence policy that impacts lives of citizens.
Funding for this project comes from the International Development Research Centre (IDRC). Kivu International and the University of Aberdeen are working in partnership with IPAR-Rwanda to implement the project.