The Association of Microfinance Institutions in Rwanda (AMIR) has urged Microfinance Institutions (MFIs) to ensure transparency and mitigate business risks.
The Executive Secretary of AMIR, Rita Ngarambe, told Business Times, Monday, that most MFIs in the country fail to carry out risk management, ending up bankruptcy and leading to loss of savings among customers.
“Our people lost money when nine MFIs were closed in 2006 and lost confidence in them after running bankrupt, now we want all MFIs to learn how to price their products, be responsible and come up with
modest ways of recovering loans.
We don’t want them to use harsh means when recovering the loans,” she said.
Ngarambe also noted that AMIR plans to carry out training programs among MFIs on how to focus on social objectives, monitoring their progress as well as marketing pro poor products, in an effort to avoid lending to clients who mismanage the loans.
“MFIs should focus more on financing productive activities and not for consumption or organising weddings to avoid making them poorer,” she said, adding that her institution was designing a customer protection strategy that seeks to protect MFI customers.
Ngarambe welcomed the recent initiatives by MFIs and banks to take financial services to the rural poor. The rural poor make up 80 percent of Rwanda’s population that is financially discriminated.