Government has paid Rwf2 billion to the former depositors of the Micro Finances Institutions (MFIs) that were closed over gross mismanagement of funds, a top official has said.
In 2006 eight MFIs were shut-down by the Central Bank due to huge losses suffered as a result of poor credit management practices.
Thousands of depositors and several MFI partners were affected by the closure, prompting government intervention.
The government agreed to pay the depositors 50 percent of their deposits while the remaining percentage would be reimbursed after the liquidation.
“70 percent of the people who submitted their claims have been paid,” Xavier Ngarambe, Executive Secretary of Financial Sector Development Programme in the Ministry of Finance and Economic Planning said in an exclusive interview.
Ngarambe said government provided Rwf3 billion through Banque Populaire Du Rwanda (BPR) to compensate depositors who suffered in the hands of corrupt and incompetent MFIs.
He added that for other cases where people or institutions rendered services to MFIs, there is a committee of liquidators that was appointed by the court to study their files.
“The liquidator is following it, “We can not predict when the excise will end, but depositors have been given July 13, as the deadline to submit their claims.”
Ngarambe also said that in a move to enhance the liquidation process, the Local Government Ministry and the National Police will facilitate access to the database of the national Identity Card to crack down bad creditors and defaulters.
“The core objective is not about compensating. The message is that even other MFI’s learnt that they can not just take people’s money and walk away,” he said.
Government introduced MFIs within the framework of promoting the savings culture and financing the activities that have significant impact on poverty reduction.