An official from the Association of Microfinance Institutions in Rwanda (AMIR), yesterday said that Microfinance Institutions (MFIs) are currently facing barriers which affect their effective delivery.
While presenting a report on “issues that affect microfinance institutions in Rwanda,” Patricia Uwimbabazi, said that MFIs are affected by high and various types of taxes and called for government intervention.
She made the remarks during a meeting that brought together representatives from the ministries of Commerce, Finance and Local Government. Rwanda Revenue Authority and the National Bank of Rwanda (BNR) were also represented.
“There are high local tax rates and numerous duties which are threatening the sustainability of emerging MFIs. These duties are extremely excessive and oppressive,” Uwimbabazi said.
She highlighted trading licence (Rwf 200,000) payable by every branch regardless of its income, cleaning fees which range between Rwf3,000 and Rwf10,000 monthly, and a district tax of Rwf 10,000 every month.
She added that each MFI branch is also requested to contribute between Rwf 100,000 and Rwf 200,000 annually for the District Joint Action Forum (JAF).
“These taxes are exorbitant and hindering the growth and development of the MFI sector because they limit rural penetration of the MFIs,” she observed.
MFIs, whose clients are mostly people who apply for loans between Rwf10, 000 and Rwf 100, 000, are considered major players towards achieving the Millennium Development Goal (MDG) of eradicating poverty in the country.
By close of 2009 financial sector including MFIs contributed Rwf 67.3 billion to Gross Domestic Product (GDP).
In her presentation, Uwimbabazi stated that centralized services of the Registrar General, limited commercial courts and delay of commercial trial proceedings and double auditing costs are other issues affecting the sector.
There are currently only three commercial courts countrywide; in Kigali, Huye and Musanze. All services for registering property offered by clients as loan security are done in Kigali.
François Kanimba, the Governor of the National Bank, said that the government is committed to building the capacity of MFIs and ironing out all problems.
“It will not take one day or one year, but slowly, the problems will be solved and their capacity to deliver effectively built,” Kanimba said.