By Faith Nyasuguta
Rwandan banks have run out of patience with their borrowers, with some already put up for auction.
For instance, hotels have been listed for auctioning amid the Covid-19 pandemic that has kept guests away, further slowing down the sector’s recovery.
Two renowned Kigali hotels, Hotel Portofino and The Mirror Hotel have this week been listed on a collateral auctioning platform by Rwanda’s Development Bank stirring fear across the industry.
According to the lender, the two hotels have non-performing loans that predate Covid-19 by two years.
One of the hotels had even secured a buyer but the deal missed to work out.
As Covid-19 ravaged the nation, several hotels that were servicing loans were issued grace periods and moratoriums, adding to the lenders’ risk of amassing non-performing loans (NPLs).
Statistics from the Rwanda National Bank reveal that the banking sector’s NPLs ratio shot to 6.6 percent in March 2021 from 4.5 percent in December 2020, and 5.5 percent in March 2020.
In the microfinance sector, the NPL ratio rose from 6.7 percent in December 2020 to 7.7 percent in March this year.
Experts explained that the negative growth was tied to the ballooning of bad loans registered in the hotel industry which increased from 4.5 percent in December 2020 to 10.9 percent in March 2021, and also in commercial real estate, which shot from 7.5 percent to 16.7 percent.
The maiden scare in the industry was in 2015 when over 100 hotels were listed for auctioning after defaulting on their loans.
Some hotels got auctioned but the rest were salvaged following state intervention.
Rwanda has benefited from Mice (Meetings, Incentives, Conventions and Exhibitions), which have added some stability to the sector.