New project to ease access to affordable loans

Funding sources for micro-finance institutions (MFIs) and SACCOs could increase following the launch of a new project that seeks to ease access to micro-loans from funders abroad, according to project implementers.

Funding sources for micro-finance institutions (MFIs) and SACCOs could increase following the launch of a new project that seeks to ease access to micro-loans from funders abroad, according to project implementers.

The web-based initiative being implemented by People Helping People International (PHPI), a US-based non-profit credit firm, is also expected to ease financial monitoring and reporting by SACCOs and donors, as well as eliminate wasteful paper processes.

“This will help credit firms save up to $1150 (about Rwf800,000) per year, promote  transparency and accountability in the micro-finance industry,” Robert Evans, micro-loans director at PHPI, said while meeting Rwanda Cooperative Agency  officials in Kigali on Tuesday.

“We are focusing on improving finance accuracy and efficiency in data collection, transmission and financial monitoring between, borrowers, credit firms and the central bank,” Viet Nguyen, a finance expert and website developer at PHP, said.

The initiative is currently being tested in Rusororo, Gasabo District, according to Gilbert Habyarimana, the Rwanda Cooperative Agency deputy director general. 

Habyarimana was optimistic it would help streamline the way SACCOs operate, especially the institutions’ loan departments. He said it will reduce the need for frequent time consuming costly audits because RCA or central bank can see what is  happening at each SACCO bank at any time in their  main office. The system can also be used to acquire lease loan products, including farming equipments.

How the system works

A borrower applies for a loan through a SACCO; then the SACCO posts his application on the website where it is connected to the donors, who channel the money through PHPI to MFIs and SACCOs for on-lending to customers at minimal interest rate. A borrower can apply for a minimum loan amount of $1,000 according to website developers.

The mode of payment is in such a way that the borrower is obliged to pay back to the SACCO, which remits the money after deducting interest. The firm will provide MFIs and SACCOs with computers, web-cams and software to be used in the project.

 

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