Rwanda: Savings and Credit Co-operatives to Offer Loans, Take Deposits

Nov 2011
Nairobi, Kenya, November, 27 2011 - Rwanda has turned to grassroots savings mobilisation schemes to increase access to financial services. The National Bank of Rwanda (BNR) has licensed 355 of the 416 savings and credit co-operatives (Saccos) operating across the country to offer loans in addition to collecting deposits.

Currently, only 14 per cent of the Rwandan population has access to formal banking products while 7 per cent use other formal products such as loans from microfinance institutions, according to findings from a recent report by the International Monetary Fund on Rwanda’s financial sector.

“We are seeing very positive results, which is a big step in bringing financial services closer to the people... The saccos are going to reach the people, down to the sector level,” Finance Minister John Rwangombwa said of the Sacco programme launched in 2009.

Rwanda has the shallowest banking sector with a ratio of bank assets to GDP of only 19.7 per cent, according to the IMF. It is estimated that 33 per cent of the population is currently being served by saccos and microfinance institutions, leaving approximately 53 per cent of the population unbanked.

Mr Rwangombwa said saccos were not only improving access to finance but also boosting deposits within the banking industry.

As of June 30 this year, deposits and loans from Saccos increased from $35 million to $60 million and $51 million to $54 million respectively, according to the central bank.

“We expect to see saccos improve lending to the population and small investments around the country. Saccos not only give small loans to small investors at their level but they also create big deposits that are given to big investors,” Mr Rwangobwa said.

Claver Gatete, the Governor of BNR, said the central bank had intensified supervision of saccos to improve their governance and minimise risks.

The central bank this year set up a technical control unit with a team of inspectors at each district to monitor and supervise operations of saccos. “We want to make them solid and strengthen their operations as financial institutions to make sure they are viable by offering them technical assistance and monitoring them on a day to day basis.” he said.

The central bank is also working on creating shared infrastructure system to enable Saccos to report like commercial banks on a daily basis.

Source : The East African

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