How varsity students turned saving club into microfinance

Banamwana in office at the main branch of the microfinance in Gisozi. Simon Peter Kaliisa.

To be a first-year university student to most is like an escape from the high school routine and the entry into a world full of fun and freedom.

Very few think of what will come after graduation and even fewer students come up with early plans to prepare for their post-university life.

But for Gilbert Banamwana and other thirteen students, in 2012 during their first year at Kigali Independent University they had already envisaged what could happen when were done with education.

This made them think of a solution that can help to access jobs or entrepreneurial opportunities.

Sitting in one of the lecture rooms, members pooled in business ideas, they thought that could be easily turned into viable businesses ventures that could employ them.

Among the ideas were starting retail shops dealing in textile and agricultural produce among others.

But they realized that they did not have the necessary financial requirements to kick off the business ideas. They came to a common understanding that it would be best to first seek funds jointly if they were to make their business ideas successful.

 Banamwana said that they developed a saving club of fourteen members whereby he was chosen as leader. The group set an ambitious goal of raising Rwf 300 million worth capital in three years to ensure that by the time they graduate, every member was to be in a position to finance his or her own project.

Within one year, they altered the vision from fundraising to ensure that they would be able to provide jobs to all members.

Banamwana said that they went back to the drawing board to brainstorm on avenues that could provide jobs to members.  After long discussions and research, they choose to become lenders to those who are in need of small funds to start their business. They set out to start a microfinance institution with an ambitious vision of owning a bank someday.

To make this happen was another uphill task as by the end of the second year what they had was only raised Rwf 5,600,000 which was still below the minimum capital requirement for micro-finance institutions by the National Bank of Rwanda (BNR), the regulator.

Banamwana now the Managing Director Cycle Investment Cooperative (CIC) microfinance located in Gisozi said that turning a lecture room idea into tangible formal microfinance came with its own set of challenges of fulfilling minimum standards set by the National Bank of Rwanda to become fully operational.

But with determination and dedication, they carried on with their ambition of owning microfinance institution.

Banamwana narrates that the stringent measures of BNR was the litmus test for the group but they were able to navigate through and  in August 2014 when they got the green light from the regulator affirming that now they are free to reap from their long due sweats.

Achievements and future prospects

Banamwana noted that what was then a lecture room brainstorming idea has since been able to mobilize more than 2100 members with total deposits of over Rwf 250 million in seven years.

Also, the microfinance has issued loans to more than 600 businesses, and also created jobs for eight founding members.

Banamwana still has the conviction that someday, they will be in position to own a bank as they are mulling several ways that can make this come to pass.

This year they expect to open up an outlet in Nyabugogo, but also have plans to embrace digitalization of their system which will help in reducing the costs of operations and increasing profits.

He said that technology adoption is inevitable but also they think that it will cut down the cost their members incur in transacting the institution consequently mobilizing more savings and deposits.

Banamwana said that also this year they want to increase the number of members to 10,000 and increase the deposits to over Rwf 300 million.


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