HUYE – National Bank of Rwanda governor François Kanimba has dispelled popular delusion that the Umurenge Sacco- a Sector based savings and credit cooperative is only meant for people in the lower income bracket.
Speaking during a meeting with local leaders and heads of Sector SACCOS in the province on Wednesday, Kanimba said SACCO should be seen as a national solidarity for development.
The governor noted that only 30 percent of the population in the country use banks and other micro-finance institutions, a situation he said, makes it difficult to mobilise people towards development.
“It is difficult to mobilise people for development if 70 percent of our people are still keeping their money in homes. We need to get at least half of the Rwf80billion currently in circulation into financial institutions,” he said.
Kanimba called upon local leaders to lead by example and open up accounts in their Sector Saccos, in order to encourage the local people to join.
Pointing out lack of the necessary logistical support to start the programme in sectors, local leaders said residents are reluctant to join Sacco due the negative image of micro-finance institutions in the country.
“The collapse of micro-finance institutions in the past which led to a loss of depositors’ savings has left a lot of distrust for such programmes among the population,” said Alex Munyamfura, the Executive Secretary of Mukura sector.
On the fate of depositors who lost their savings in defunct micro-finance institutions, Kanimba explained that government stepped in to pay 50 percent of the money individuals had saved with the nine micro-finance institutions that were closed down.
The other half, he said, which was supposed to be paid after recovering bad loans is still hanging in balance.
“Out of the Rwf1.8billion in bad loans, only Rwf200m has been recovered; this has been attributed to the reluctance on the part of the local authorities to force defaulters to pay back,” he said.
Sacco leaders in different sectors voiced their concern about the minimum requirement of 1,500 people to start the operations of Umurenge Sacco.
However, Damien Mugabo, the director general of Rwanda Cooperative Agency told the local leaders that the suggested number was meant to ensure that Saccos start off with enough share capital if they are to benefit members.
“This is not a rule, Saccos are at liberty to start with any number of people, our suggestion of 1500 members is in a bid to ensure that Saccos start off strong,” he said.
Francois Ngarambe, who represented the Ministry of Finance, promised support for the programme especially at the take off stage.
“We will give support in the form of training, provision of equipment and payment of salaries until Saccos are able to finance themselves,” he said.