The Rwanda Corporative Agency (RCA) has called upon Savings and Credit Cooperatives (SACCOs) in the country to introduce corporate governance if they are to increase output through efficient service delivery.
Vincent Rutaremara, the head of Cooperatives Supervision and Audit Unit at RCA said corporate governance will help to promote accountability, protection of members’ rights and freedom in addition to promotion of transparency and integrity.
“With corporate governance, people will easily access and trust economically viable institutions to which they entrust their savings,” Rutaremara said, adding that SACCOs like any other financial institution provide access to finance and financial services which is essential in rural development.
He made the call last week at Hotel la Palisse Nyandugu where the Association of Microfinance Institutions in Rwanda (AMIR) organised a one day conference on the best practices in the microfinance industry.
The conference was organised under the theme ‘effective governance, management, innovation for quality and inclusive financial services’.
Rutaremara’s call comes at a time when the government has started a countrywide campaign to set up at least one SACCO per sector in its bid to boost national savings through extending financial services to the rural community.
Government expects SACCOs to provide means for ordinary people to learn the values of regular saving and the wise use of credit hence achieving economic empowerment.
Introduction of corporate governance could be a big boost to the sustainability of these SACCOs whose governance is challenged with inadequate supervision, unqualified personnel, lack of proper and clear rules, and governance structure.
Government is also engaged in the consolidation of domestic saving and SACCO has been identified as one of the vehicles through which savings mobilization will be lifted.
According to official statistics from the Ministry of Finance and Economic Planning, the Gross Domestic Savings are consistently in negatives ranging between -1 to -3 percent of Gross Domestic Product (GDP).
The Gross National Savings (GNS) including net transfers have averaged 10 percent of GDP since 2001. This falls short of the 18 percent which is the required level of GNS for the EDPRS by 2012.
The Ministry of Finance says that there are efforts to mobilize additional five percent of the GDP every year starting from 2009 in order to reach the 18 percent target.
According to similar statistics, having one SACCO per sector will help to mobilize 10 percent of rural production this year, representing Rwf60 billion.
In order to reach GNS target, government also plans to introduce mandatory pension for all and provident fund within the Rwanda Social Security Fund with a contribution rate of 20 percent gross salary.
Encouraging private pension and collective investment schemes will directly raise savings from the public and will be a major intermediary between the savings vehicles.
The government has also established the National Savings Directorate, a special department in charge of designing new savings products, capacity building and pilot programme planning.