Legal and institutional framework of consumer protection in credit contracts in Rwanda

Abstract

The present scientific work entitled "The legal and institutional framework of consumer protection in credit contracts in Rwanda" aims at analysing the Rwandan legislations and institutions in the context of credit contracts to ensure the protection of consumers in order to prevent different imbalances faced in the consumer-credit transactions. Though, the work focused on domestic legislations specifically in the banking and financial sector, it has also referred to the foreign legislations like that of Belgium, UK and Kenya among others. In the Rwandan context, this protection is not much legally guaranteed, it has created various abuses mostly resulting from financial institutions behaviors and practices. Hence, adequate analysis for the stronger legislation is necessary. All along this study, the analysis focused on three chapters among which the first chapter analysed the existing Rwandan laws whereby gaps and inadequacy of provisions regarding the consumer credit and bank credits were mentionned. The second part of the study, analyzed issues faced by the borrowers due to inadequacy of clear legislations in the domain of credit contracts. Thus, foreign legislations were referred to in order to learn from their experience in the protection of consumers of credit. In addition, decided cases in Courts in this context played a major role in the analysis of the study. The last part, that is chapter three, proposed the establishment of legal and institutional mechanisms to strengthen borrowers’ rights in credit contracts. This part looked at various mechanisms aiming at the protection of consumers in credit contracts. The enactment of specific law governing credit and credit standard agreement in the banking system were proposed. Institutionally, also necessary role of strong institutions both public and private institutions such as the National Bank of Rwanda, Office of the Ombudsman, the Rwanda Bankers’associations and consumers’associations were assessed and proposed to improve management of credit issues by setting up strong measures to solve credit issues. To sum up, the researcher recommended that : a proper law on financial services consumer protection should be enacted and through that law, a model credit agreement should be provided. Both public and private institutions dealing with credit contracts should strengthen their capacity for better protection of borrowers’rights including sensitizing all financial services consumers on their rights and the best way to ensure their implementation by establishing more consumers ‘associations, among other mechanisms.