No end in sight to SACCO automation

SACCO Ingenzi offices in Byimana Sector, Ruhango District. In the first half of 2019, profits of the Umurenge Saccos stood at Rwf2.9 billion. / Net photo

Difficulties in the automation of the operations of Umurenge Savings and Credit Cooperatives (SACCOs) have persisted, which has continued to delay the exercise.

Automating the operations of SACCOs was, among other things, expected to reduce related leakages and theft as well as ease operations, hence improving efficiency as well as profitability for the cooperatives.

However, a combination of sustained loss of funds as well as deteriorating public trust in SACCOs is increasingly threatening the fortunes of these saving schemes.  

The challenges began in 2015 when FinTech – a Kenyan firm, was contracted by the government to help automate Umurenge-SACCOs at the cost of $4.6 million (Rwf4 billion).

The firm was contracted to develop ICT-based system in computers, train the staff to use it and then connect the system in the yet-to-be-established cooperative bank connecting all the SACCOs, according to the terms of reference.

However, the firm was unable to deliver and their contract was terminated in 2018.

In March this year, the government opened a process to hire another a firm to carry out the exercise.

In March, Rwanda Cooperative Agency said that they had received expressions of interest from 19 firms upon which they had selected eight of them to make technical and financial offers.

The selected firm was to commence work in May this year with the process taking about one year.

May 2019 came and went, automation had still not commenced.

Jean-Marie Vianney Gatabazi, the Governor of the Northern Province, says from his last interaction with the Ministry of Trade and Industry, the process was to commence in January this year.

Automating the operations, he said, would reduce cases of theft and misappropriation of funds which he said have been common.

According to the central bank Governor, John Rwangombwa, the approach has since changed with the pilot phase likely to commence at the end of this year.

Rwangombwa said that considering the challenges in ‘buying a solution off the shelf’ the government is now developing the solution with the intervention led by the Ministry of Finance and Rwanda Information Society Authority (RISA).

He said that as plans stand, they hope that by the end of the year, a pilot programme will have been launched with actual automation process beginning next year to bring on board all 416 Umurenge Saccos.

The lack of automation allowed for misappropriation and theft which consequently led to a distrust of the institutions and low participation.

With the issue featuring prominently in 2018 National Dialogue Council last December, a task force was set up consisting of Ministries of Finance, Trade, Justice and Local Governments. Among the deliverables was to recover the monies lost, stolen or misappropriated.

According to Rwangombwa, By March this year, the task force has recovered Rwf2.7 billion.

These recoveries improved profits of Saccos as additional income while sending a clear message that defaulters will be followed up thereby preventing further downgrade,” he the Governor said.

In the first half of 2019, profits of the Umurenge Saccos stood at Rwf2.9 billion.

Recovery of funds is expected to continue in the coming months.

Why automation is important

Automation will make way for the establishment of a Cooperative Bank bringing together all the 416 Umurenge-SACCOs from across the country.

When complete, the new process will eliminate manual operations, reduce related leakages and theft as well as ease operations of these SACCOs that are based at all sectors.

editor@newtimesrwanda.com

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