Saving and Credit Cooperatives (SACCOs) have been urged to promote consumer protection and ensure accountability as the sector seeks ways to improve its performance.
Peter Rwema, the executive director of Association of Microfinance Institutions in Rwanda (AMIR) also urged SACCOs to put in place mechanisms to reduce the widening non-performing loans in the sector. Rwema said bad loans were recorded at 10 per cent year-on-year in June up from 8 per cent during the same period last year.
The AMIR official was speaking during a training workshop for Access to Finance Forum members from Musanze, Karongi and Rulindo districts in Kigali last Friday.
The forums were set up by the government and sector stakeholders to help in loan recovery among SACCO clients in partnership with district officials, NGOs, financial institutions, and law enforcement agencies. They also mobilise borrowers to service their loans.
“We are training Access to Finance Forum members from three districts to equip them with the capability to conduct financial education because if people are financially literate, then they can do profitable businesses and pay back loans easily,” Rwema explained.
The two-day workshop sought to equip the groups with relevant skills to enable them improve client relations and foster financial education. Some of the issues discussed during the training included responsible finance like regulation of client protection and supervision, financial education, and effective communication, among others.
Rwema said non-performing loans increased to Rwf4 billion amidst prolonged drought, floods and other natural calamities the country experienced, especially in Northern and Western provinces.
“Farmers did not get good yields due to weather vagaries, which made it hard for them to repay loans from SACCOs.”
Rwema added that one of the MFIs had a huge loan portfolio of of Rwf1 billion, but the clients experienced challenges servicing it.
Rwema was optimistic that after the training, Access to Finance Forum members will have the capacity to analyse loan applications well. Rwema said that AMIR will extend the training to other districts.
Participants speak out
Jean Marie Vianney Ndagijimana, the manager of Abahizi Tumba SACCO in Rulindo District, said the skills gained from the training will enable them serve customers better, as well as on product design, pricing and client relations.
He said he will use the skills to teach other members.