The move is expected to boost Rwanda’s Gross National Savings (GNS) from 14 percent to 23 percent by 2012, surpassing 18 percent benchmark considered in the Economic development and Poverty Reduction Strategy (EDPRS).
Government has injected a tune of Rwf4.3 billion in the development of Savings and Credit Cooperatives (SACCOs) with the hope of mobilising 10 percent of rural production in savings.
The move is expected to generate Rfw60 billion by the end of this year.
The fund was released as a result of last year’s national dialogue to have at least one SACCO in each administrative Sector (Umurenge) to promote the saving culture among Rwandans.
Damien Mugabo, the Director of Rwanda Cooperative Agency, said in an interview with Business Times last week that out of 416 sectors across the country, 387 of them have been covered.
“We have covered about 93 percent of the sectors,” Mugabo said.
He added that government will sponsor SACCOs to purchase equipment and to recruit professional personnel.
Umerenge SACCOs will be launched next month, after which they will immediately start collecting deposits, making savings and giving out loans.
The move is also expected to boost Rwanda’s Gross National Savings (GNS) from 14 percent to 23 percent by 2012, surpassing the 18 percent benchmark considered in the Economic development and Poverty Reduction Strategy (EDPRS).
However, some of the challenges hampering the savings culture include; limited knowledge about saving, poor governance , little resource capacity as well as lack of information on bad clients and inadequate infrastructure.
According to information from the Ministry of Finance and Economic Planning, only 14 percent of the Rwandan population uses banks, while three percent save with Microfinance Institutions (MFIs).
Data from the ministry shows that 52 percent of Rwandans don’t have access to financial services whereas public pension is limited to formal sector employees.
There is very little development of private pension and collective investment schemes.
According to the Strategic Plan of Umurenge SACCOs, Rwanda’s economic development agenda cannot be achieved without a financial sector which is effective and capable to expand access to credit and financial services.
SACCOs are designed to reach out to low savings and low income individuals, by offering products geared towards their unique needs within a secure and accessible structure.
A success story was registered in Nyamirama sector in Kayonza district, where locals have been saving Rwf1000 per individual every week.
In the period of one year, Nyamirama locals are now enjoying collective investments of two commercial trucks.
Another success story is the teachers’ Credit and Savings Scheme commonly known as Umwalimu SACCO that has so far attracted 35,449 members and corporate shares of Rwf20 million.
Mugabo said that share capital among the Umurenge SACCOs will be between Rwf3000 to Rwf15, 000 depending on the capacity of the sector. Interest rates will be determined by SACCOs whereas loan disbursement will depend on one’s savings.
“The picture of SACCOs we want is the one where every Rwandan can trust to save with a SACCO that would boost the national economy and improve the welfare of citizens,” Mugabo said.
Alongside the SACCOs the Ministry of Finance has introduced a special unit to design saving products suitable for different classes of Rwandans.
The scope of these products is designed for the youth, Diaspora and women. The women Bonus saving scheme is being designed purposely for low income women to access banking services.