The Minister for Trade and Industry, Vincent Munyeshyaka, has urged Umurenge savings and credit co-operatives (Saccos) managers to uphold professionalism and accountability to boost rural access to financial services. The Minister was speaking recently in Kigali during a consultative meeting with countrywide Saccos Managers organized by the Rwanda Cooperatives Agency in partnership with his ministry, the National Bank of Rwanda and other stakeholders. He noted that Sacco’s have contributed a lot in fostering economic development by offering financial services, particularly loans and savings to people with limited access to commercial banking services. However, there have been cases of embezzlement and poor management of funds which is regarded as a threat to future development of the sector. “There is a Sacco in each sector which means that they have the capacity to reach the majority of the population more than any other financial institution. This advantage of easy accessibility should be accompanied with significant movements. If it is an issue of management skills you have to upgrade them to meet the standards of efficient fund management. We will not tolerate more fraud or malpractices,” he said. According to the Ministry of Trade and Industry, in addition to encouraging members to save, the SACCOs provide loans to supporting income-generating activities that help elevate the standard of living for rural populations. Presently, there are 416 Saccos countrywide with over 3 million members with Rwf 66 bn in savings. According to the Director of Microfinance Supervision at the National Bank of Rwanda, Kevin Kavugizo, Umurenge saccos have played a big role in terms easing access to financial services, especially among the rural masses. “SACCOs give loans at an interest rate of 2 per cent, while other Microfinance Institutions (MFIs) the interest rate is up to 5 per cent. However, the SACCOs still have many challenges, including a high rate of bad loans. Managers should able to come up with innovative measures to recover these loans,” he said. Kavugizo mentioned that the high rate of non-performing loans in the sector was mainly attributed to malpractices and bribery of management during loan application process which further goes on to affect the recovery process. Saccos represent 48 per cent and 55 per cent of total assets and deposits, respectively of MFIs, according to the Central Bank’s 2014/15 report. The same report indicates that assets owned by Saccos grew by 30 per cent. However, bad loans accounted for 8.2 per cent, an increase from 7 per cent in July 2014, a situation the central bank attributed to weak enforcement of credit policies. Jean Bosco Harelimana, the Director General of the Rwanda Cooperative Agency (RCA) said that non-automated accounting systems and weak governance were still challenges that impede better supervision. Manual processes have been faulted to slow down delivery of services, exclusion from the national payment system and Credit Reference Bureau (CRB), increasing risk of fraud, high level of errors and inconsistencies in data among others. Among the rapid solutions to improve accountability in Umurenge Saccos is to deploy external auditors. Each district will have two members of staff who will closely monitor Sacco’s daily operations in a bid to ensure accountable and efficient management. “The move is part of efforts to curb rampant embezzlement and poor accountability for funds in various Sacco’s leading to millions of francs lost. Another important move is to have all Umurenge Saccos embrace automated system by 2019 which will ease transactions and ensure transparency of operations,” he argued. He noted that in the near future Umurenge saccos are expected to extend to district SACCOs and a co-operative bank system. “RCA and stakeholders are already putting in place the necessary infrastructure, including Internet connectivity, computers and electricity supply,” he added. Participants’ feedback Faustin Uwumuremyi, Gatenga Sacco President, cited challenges of communication flow where they send their inquiry to the RCA team and wait for months with no feedback which affects their performance. He also talked about the issues of poor collaboration in the auditing process where some auditors from the RCA act as policemen not giving them an opportunity to clear the identified mistakes. Responding to this issue, Harelimana pledged his commitment to end the barriers in communication process and even gave them his contacts to report to him directly whenever they fail to get feedback from the responsible staff. He also asked the auditors to exercise their power in line with the rules governing them other than abusing them to the expense of managers. editorial@newtimes.co.rw
