The Minister of Justice, Tharcisse Karugarama, has challenged stakeholders to devise faster means of recovering funds to repay debts amounting Rwf 1.8 billion owed by defunct Microfinance Institutions (MFIs), to their former clients.
He said this during a meeting by the taskforce established to recover money from nine nonfunctioning MFIs.
The MFIs were closed in 2006 when many of their clients failed to pay back loans, while others were mismanaged by their leaders, leading to loss of money deposited by unsuspecting clients.
Speaking at the meeting, Monique Nsanzabanagwa, the Deputy Governor of the Central Bank, disclosed that recovery of the funds was hindered by various challenges despite the zeal by the taskforce.
“Many MFIs did not provide their debtors with proper documentation while they acquired loans; therefore in some situations, we do not have the legal grounds to collect this money,” she said in an interview.
“However, through insolvency of the closed MFIs, we were able to collect Rwf 400 million and we have stepped up efforts to recover the balance and pay off their former clients”.
Karugarama said that current efforts are not satisfying and that the situation could hamper citizens’ trust in saving or borrowing from financial institutions.
“There is disconnection between what we say in the meetings and what we implement on the ground. That is why efforts to recover this money are less; we have done everything technical to ensure that this issue is resolved, but there seems to be no interest in implementing the resolutions,” Karugarama said.
He urged stakeholders to develop a working action plan, to ensure that the money is recovered in the shortest time possible.
The minister tasked the technical committee to formulate drafts indicating the recovery process and the methods implemented, which he will present to the cabinet.
The Head of the Technical Committee, Regis Rukundakuvuga, added that the recovery process was also hampered by lack of information, whereby some people who owe the closed MFIs have the money but don’t know which account to deposit it, whereas others simply don’t have the will to pay.
“We must publicize the bank accounts where those that have debts with the nonfunctioning MFIs can make deposits,” he said.
The taskforce is made up of officials from the Ministry of Justice, Local Government, and Internal Security, as well as from the Central Bank.