Monday, May 9, 2011

Finance Minister Appears Before Senate Over Saccos

A recent report by the Senate’s economic development and finance commission reveals that there is a problem of lack of ownership by Rwandans in Savings and Credit Cooperatives commonly known as SACCOs.

It’s in this regard that John Rwangombwa, the Minister of Finance and Economic Planning this Monday appeared before Senate to give oral explanations about a variety of issues affecting SACCOs countrywide since their establishment in October 2009.

The Commission, headed by Senator Ayinkamiye Speciose late last year visited 16 SACCOs in all the four provinces plus Kigali city. Among the common problems identified are lack of a sense of ownership of these cooperatives by Rwandans, poor structures housing them, lack of materials such as computers, inexperienced workers, lack of control (audit), lack of security where they are guarded by unarmed local defence personnel and confusion between the duties of the Central Bank and Rwanda Cooperative Agency.

Rwangombwa acknowledged that there are challenges facing SACCOs but said government had decided to start SACCOs in all the 416 sectors countrywide and make reforms along the way rather that start pilot SACCOs that would have been more costly and time consuming yet 52% of Rwandans had no access to financial and banking institutions then.

Rwangombwa said that as of March 31, membership had risen to 1.5m people while deposits stood at over 10bn francs, a figure they had targeted over a period of three years but achieved in just over a year.

Although the Minister said membership and shareholding had considerably increased over the past few months, the Senate commission found most Rwandans still think SACCOs are government institutions aimed at out-competing the already existing Microfinance institutions and as a result feel they don’t own them.

Rwangombwa said this might be because it’s the government that initiated and set up SACCOs but says they are for Rwandans and that they have been explaining this to them.

On the issue of SACCOs not being well controlled, the Minister said the Rwanda Cooperative Agency follows up their management, while the central bank which regulates all financial institutions has recruited 60 people (2 for each district) to monitor and ensure that SACCOs adhere to established financial rules and regulations.

Senator Mugesera Antoine asked about the longterm plan of SACCOs and wondered whether they would not overgrow and become uncontrollable. Rwangombwa said the government’s longterm plan is to later merge them and form one bank, the cooperative bank in the future like what happened with Bank Populaire du Rwanda.

The 2011/2012 budget has allocated 2.4bn francs towards SACCOs and Rwangombwa said the plan is to help them for three years when they hope they will have developed enough to stand on their own.

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