Rural savings groups to be linked to mobile banking

Voluntary Savings and Loans Associations (VSLAs) will soon stop using cash in their financial transactions thanks to MTN’s mobile money service, which will boost the groups’ savings by providing accounts where members can safely deposit their funds.
Members of a savings and loans Association in Kirehe District- Their savings have been at stake due to lack of proper saving methods The New Times /Dias Nyesiga
Members of a savings and loans Association in Kirehe District- Their savings have been at stake due to lack of proper saving methods The New Times /Dias Nyesiga

Voluntary Savings and Loans Associations (VSLAs) will soon stop using cash in their financial transactions thanks to MTN’s mobile money service, which will boost the groups’ savings by providing accounts where members can safely deposit their funds.

Innocent Rutikanga, the Project Manager at Care International Rwanda said that each group will have a mobile phone with a mobile money account for the group and each member will be able to send their savings.

Care is an international non governmental organisation which initiated the VSLA program in Rwanda to help the poorest of the poor in rural areas to learn how to save and acquire loans from the savings.

“Care recognises the need for these VSLAs to link to financial institutions and mobile money systems for providing more diverse range of financial services to the people,” Rutikanga said in an exclusive interview with Business Times yesterday.

The move to be championed by MTN will see some 4,999 VSLAs that have currently accumulated savings of over Rwf500 million move from saving cash in small boxes to engaging in cashless transactions.

“Because these groups are located in remote areas, access to banks and microfinance institutions has been a problem due to high transport costs and time consuming,” he said.

The head of mobile banking at MTN Rwanda, Albert Kinuma, is optimistic that with the operator’s network coverage of 90 percent, all the rural VSL A based groups will be accessed via mobile money.

“We are willing to help in extending financial inclusion to rural people who have been financially excluded,” he said

Kinuma noted that the company boosts of 90 per cent coverage with 480 agents countrywide with plans to expand, which gives it an opportunity to penetrate unreached rural areas.

The Executive Secretary of Association of Microfinance Institutions in Rwanda (AMIR), Rita Ngarambe, said that: “We are optimistic that such initiatives will help the unbanked rural access financial services.”

Since each group will receive a mobile phone which will operate as a bank account, the initiative is also expected to help solve the problems arising from poor record keeping and management within VSLAs.

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