Rwanda : Rural Development in Rwanda, SACCOs vital contribution

The New Central Bank assessment shows that, Financial institutions ‘Savings and Credit Cooperatives’ (SACCOs) which have been created to better social-economic development of people have made tremendous achievements while all expectations fulfilment seem to keep advancing. The remarkable growth allows people especially in rural areas to save money, access loans and credit for different business activities as well as invest and lift themselves out of poverty.

By September 2012, the amount of money deposited with Savings and Credit Cooperatives (SACCOs) and other microfinance banks hit Rwf 44 billion. This signals the great potential that lies within successful implementation of the Umurenge Sacco program, an initiative that aims to increase access to financial services and boosting domestic savings especially in rural areas.

More importantly, SACCOs were created in order to satisfy the need of building confidence in local population who feel SACCOs would end up running bankrupt and the operators disappearing with deposits as it was the case with COOPECS.

The concept of Umurenge SACCO was initiated on the understanding that banks and other financial institutions are more concentrated in towns and less spread in rural areas to serve the poor. As such, establishing a SACCO at every sector (Umurenge) has bridged the then gap.

According to the Central Bank Governor Ambassador Claver Gatete, SACCOs have reached beyond the expectations. “SACCOs have now decreased the number of people who were seen as non-interested in savings and banking services from 58% to 28%. It has instead augmented and doubled the number of Rwandans who are active in banking services from 21% to 42%.”

Local authorities congratulated

Having been once accused of neglecting SACCOs before them to start operations in 2009, local authorities are being now praised by Government officials for having succeeded in convincing the population to believe in SACCOs and participate actively.

“I really thank local leaders who did a very good job by sensitizing people and explaining to them the importance of SACCOs, the results speak for themselves”. Central Bank Governor Claver Gatete said.

They are said to have overcome big challenges that financial experts were noticing while SACCOs were being finalized in 2009. Those are low reporting level and low reliability of the transmitted information related to lack of computerization and low capacity of the managers.

But SACCOs are now managed by Bachelors degree holders and many of them use computers and connected to the internet. When they started operations in 2009, 416 SACCOs were financed by the Ministry of finance, but now at least 290 are fully self-financed.

With over Rwf 44 billion deposited in SACCOs and other microfinance institutions, the number of people involved in that savings and credit system is above 1, 5 million. With such a success SACCOs have been earlier this year advised to invest in Capital markets as a way of maximizing profits for their members.

It has been said also that Government is considering the merger of all those savings and credit cooperatives (SACCOs) into a cooperative bank as it accelerates efforts to increase access to financial services in rural areas.




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