SACCOs : Getting the unbanked into the financial services loop

By Paul Ntambara On October 31 Rwanda joined the rest of the world in marking World Savings Day. This day is designed to encourage savings by all, particularly among poor households. Under the auspices of the Ministry of Finance and Economic Development, Saving and Credit Cooperatives commonly known as Umurenge SACCOs were launched in all the thirty districts in the country.

By Paul Ntambara

On October 31 Rwanda joined the rest of the world in marking World Savings Day. This day is designed to encourage savings by all, particularly among poor households. Under the auspices of the Ministry of Finance and Economic Development, Saving and Credit Cooperatives commonly known as Umurenge SACCOs were launched in all the thirty districts in the country.

By its nature, a Savings and Credit Cooperative (SACCO) is a financial institution under the cooperative structure. It is a cooperative which operates in the financial system; it is a legal entity, in which individuals save their money and can get loans in order to invest in various activities. SACCOs reach out to low savings and income individuals by offering products geared towards their unique needs within a secure and accessible structure.

SACCOS reach members and areas that are unattractive to banks. They can provide access to members of the population who would not normally save in the formal sector, nor be able to physically access a traditional financial institution, especially commercial, due to locality and deposit restrictions.

In December 2008, a National Dialogue Meeting recommended the creation of at least one SACCO at the level of each Administrative Sector (UMURENGE). In 2009, these SACCOs were established as a way of speeding up the provision of financial services to Rwandans of different income levels. This was seen as one way that will lead Rwanda to a middle income country as stated in the 2020 vision.

The UMURENGE SACCO Program is part of the National Savings Mobilization Strategy adopted for creating inclusive financial system in Rwanda. The concept of Umurenge SACCO was initiated on the understanding that banks and other financial institutions are more concentrated in towns and less spread in rural areas to serve the poor. As such, establishing a SACCO at every Umurenge would bridge this gap.

SACCOs were established to promote a culture of saving resulting in access to low interest loans and credit for different business activities, thus allowing them to invest and graduate from chronic poverty. To date more than 416 Umurenge SACCOs have been established across the country with the objective of increasing access to finance by local population.

SACCOs at Umurenge level play a significant role in savings mobilisation, promotion of investment, economic growth and poverty alleviation. They have huge potential to play a key role in the Country’s sustainable economic growth based on national resources.

A 2008 study in Rwanda showed that only 21 percent of the adult population in the country have access to services offered by financial institutions. It also showed that 52 percent of Rwandans above the age of 16 don’t have access to financial services.

Officially inaugurating the savings week in Kamonyi district, Finance Minister Honourable John Rwangombwa called for more vigilance in bringing this group of people into the financial sector loop.

“We cannot achieve development without the involvement of the majority of the population. This is why the SACCO program comes in handy,” the Minister said.

The minister noted that the National Saving Mobilisation Strategy established in 2009 is geared at ensuring macroeconomic stability, promoting a culture of saving, setting up saving and credit cooperatives countrywide, putting in place varied options for saving, building the capacity of financial institutions and establishing a Rwanda Stock Exchange.

Facts that figure

Rwanda’s grass roots savings mobilization scheme commonly known as Umurenge SACCOs deposits reached Rwf 14.7 billion with Rwf 1.8 billion given out as loans as at  mid 2011. SACCOs countywide now have deposits  reaching Rwf 35  billion by mid 2011 up from Rwf 21 billion last year while gross loans  given out  rose to Rwf 32.2 billion up from Rwf 30.5 billion last year, according to Central Bank.

Statistics indicate that national savings will scale up to 12.6 percent mark of GDP in 2011 while investment will make 24.2 percent of GDP.


Table : Indicators regarding the implementation of UMURENGE SACCO Program:

Population >=16 years old  Membership Subscription  Nbr of members who paid Shares  Nbr of Accounts Opened  Shares Subscripted Mio.RWF  Shares Paid up Mio. RWF  Deposits Collected Mio. RWF  Loans Granted Mio. RWF
31-Dec-10  5,028,577  1,069,675  695,095  471,036  4,116.69  2,111.83  6,322.27  813.72
30-Jun-11  5,083,905  1,212,192  959,976  723,188  4,809.84  2,789.15  14,647.90  1,765.13
% Change  1.1  13.3  38.1  53.5  16.8  32.1  131.7  116.9

Source: BNR, Microfinance Supervision Department

Rwf100 is all I had to start with
Sylvie Mukamana from Kigali Sector in Nyarugenge district was just like any other house wife, preoccupied with daily household chores until an idea to join a local women association and then enlisting the financial services of the Sector SACCO struck her. Like they say the rest is history. Below, the mother of three shares her journey to financial freedom.

I started saving in 2011 through an association of 50 women where we contributed Rwf100 each. I acquired a loan of Rwf50, 000 from the association which I invested in retail business dealing in African fabrics (Bitenge). My first clients were people from the neighbourhood.

When Kigali Sector SACCO opened I opened up an account with them. SACCO officials explained to me the importance of acquiring a loan to improve my business. I was convinced. After the required paper work, I was allowed a loan of Rwf300, 000.

I expanded my business, together with a group of women. At this point I realised the need to expand the business. I went back to the SACCO for a much bigger loan, I was given Rwf1million. Currently I have bales of cloth worth Rwf2.5million.

Apart from the African fabrics business, I have managed to buy a motorcycle from which I earn Rwf3000 daily. SACCO is very important because it is close to the people. We have now outgrown the fear of acquiring loans especially women. I am now a rich woman. They are all in school.
I am now in position to support my husband in providing for our home. People should begin working with SACCO because unlike other financial institutions, the interest rates are very low and the repayment period is long.

After repaying the current loan, I want to apply for a much bigger one where I will be able to supply cloth to other retailers.

Kigali Sector SACCO at a glance
1480 members 773 women, 548 men
Given out loans amounting to Rwf8million
12316 have attained the required age to save with SACCO

Ends