Abstract
Abstract Until recently, the Rwandan government had not formally adopted global financial standards beyond Basel I. However, in 2015, the government’s stance changed and politicians made a formal commitment to the rapid adoption and implementation of Basel II and III. This exuberance for adopting global standards is puzzling given that Rwanda’s financial sector remains largely underdeveloped and the government is aiming to become a developmental state. The motivations behind this policy shift are to reduce risk in the financial sector, encourage harmonization of financial sector regulation across the East African Community (EAC), and develop a service-based economy, including by making Kigali a financial hub. Yet ambitious fast-paced policy-driven adoption in Rwanda conflicts with developmental state goals of direct lending. Adoption is beset with potential problems, with uncritical adoption of global financial standards likely to create difficulties for the domestic banking sector in the short-to-medium term.
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