Microfinance Institutions (MFIs) must be innovative to avoid duplication of financial products if they are to promote financial inclusion for all.
The Association of Microfinance institutions-AMIR says that the current MFIs’ rush to rural areas to tap the unbanked poor would not reap the expected results unless new products are crafted.
“MFIs must know that products that work here in town cannot work well in rural areas, they need to craft new products that will help these poor people access financial services,” Rita Ngarambe, the Executive Secretary AMIR noted.
Ngarambe says that many MFIs operating in towns open branches in rural areas and still use similar methods in providing services to the people.
“Because of this problem of MFIs using the same products, it is affecting them greatly especially with increasing Non Performing Loans, poor governance and operational risks,” she explained.
She further lamented that the lack of communication skills among MFIs has affected the promotion and development of their products and catalysed low turn up of clients as they cannot understand the services available in MFIs.
Many microfinance institutions and banks design product information in a complex manner unfamiliar to rural poor.
However, Ngarambe noted that AMIR embarked on training MFIs on financial reporting, accountability and customer care as one way of helping them break through challenges hampering their rural performance.
The Rwanda cooperative alliance is optimistic that the tremendous performance of Umurenge SACCOs need stable MFIs that are able to serve the demand already created by the SACCOs.
“We have achieved a lot in cooperatives and what we need now is strong financial institutions that are able to provide banking services,” Audace Bimenyimana, of Rwanda Cooperative Agency said.
He added that more cooperatives are opening and savings have increased due to the initiatives put up to promote rural financial inclusion.