Teachers will only be able to borrow up to Rwf 35 million from their savings cooperative which is grappling with bad debt.
The new credit limit is half the amount they had access to.
Umwalimu Savings and Credit Cooperative (SACCO) announced the new limit as part of reforms designed to stay afloat.
Laurence Uwambaje, the cooperative Director General told a General Assembly of members last week that the decision to reduce the threshold from Rwf 70 million to Rwf 35 million, was reached after realising that the cooperative was being exposed to bad debts.
Although the cooperative was established to improve teachers’ welfare, it cannot afford to lose a lot of money to teachers, who decide to run away after taking loans, she said.
The cooperative has 73,553 members most of whom are teachers by profession.
“Approving loans has become risky. We cannot be sure that the cooperative will recover the loans. We should first find a more efficient way to recover the money borrowed, even when the teachers who applied for the loans resign or get fired from their jobs before repaying,” Uwambaje said.
The reforms also saw the maximum repayment period reduced from 15 to 10 years.
Teachers were called on to be cautious while signing for their colleagues as guarantors to avoid taking responsibility in case the borrower disappears.
A report presented at the Umwalimu SACCO’s 16th Ordinary General Delegates Assembly, in Kigali, shows that the cooperative has approved a total of 1, 052, 066 loan applications worth Rwf 150 billion.
However, about Rwf 46 billion is yet to be recovered by the cooperative.
The cooperative assembly agreed in principle to recover the money at all costs to avoid general loss for members in general.
“The money should be recovered by all means to protect and maintain the cooperative members’ financial security. Moving forward, loan applications should be always approved after careful analysis of one’s borrowing capacity,” said Florent Mpozembizi, the cooperative teacher’s representative in Kavumu Sector of Ngororero.
The cooperative General Assembly meanwhile approved new 2017 budget, totalling Rwf 40.1 billion, a drop from last year’s Rwf52.9 billion.
A large chunk of the budget (Rwf33.2bilion) will be loaned to the cooperative members.
It, however, targets Rwf 2.9 billion profit compared to Rwf2.5 billion recorded so far this year.