The amount of money deposited with Savings and Credit Cooperatives (SACCOs) hit Rwf1.5 billion in June as government intensifies mobilization for grassroots savings.
This follows implementation of the first phase of “Umurenge SACCO” program aimed at increasing financial access and boosting domestic savings.
In an interview with Business Times recently, Francois Kanimba, Governor of the Central Bank announced that the program is being implemented as planned with the first set of licensing SACCOs having been completed.
A total of 416 SACCOs created in all sectors are authorized to open accounts for their members to receive deposits and withdraw funds when necessary.
“The program is moving smoothly but I cannot say that there are no challenges. Mobilising people to pull their savings together has created concern in an environment where a number of SACCOs created by communities in the past failed, and some people lost their funds in the process. This has been a major challenge,” Kanimba said.
While challenges remain, the Governor observed that the program has made tremendous progress with deposits in SACCOs expected to go beyond Rwf2 billion by the end of the year.
“There is some potential to tap- I am very confident when I see what is happening now and compared with comments of the people one year ago – the picture has completely changed and there are more positive comments from the people,” he observed.
The Central Bank which is charged with regulating and supervising the sector says the full licensing process which will allow these SACCOs to distribute credits is on-going.
The process requires SACCOs to produce a clear business plan and operational procedures to manage credit risk.
“Availability of management capacity is the key aspect. The institution should have a team with the minimum capacity to receive savings from the people and make sure that credit risk is somehow under control,” he added.
Kanimba identified management capacity gaps as a key challenge affecting the performance of the program.
“Everything relies on the capacity of staff that is being recruited to run these institutions properly. By this time, the acceptability of the program by the people is no longer in doubt,” he said.
However he mentioned that with close involvement by the government, successful implementation of the program is possible as challenges get addressed.
“Local authorities are now sensitised about these issues and all of them seem to be mobilised to support and find a way to facilitate the launch of this initiative.
The program was adopted by government under the Financial Sector Development plan following the study known as “Rwanda Finscope 2008” which indicated that only 15 percent of Rwandans had access to a formal banking system leaving over 52 percent financially excluded.