Financial constraints cripple Umwalimu Saccos loan book growth

Financial constraints cripple Umwalimu Saccos loan book growth

Despite   registering a huge profit    last year mainly  driven  by   increased loan  book as well as  dropping  Non  performing loans-NPLs,  Umwalimu  Sacco  says  lack of financial  capacity  is   hampering the growth   in its loan  book .

To extend to   its clients, the country’s teachers Savings and credit cooperatives relies on the returns from the loans disbursed as well as teachers’ savings which is not enough to   satisfy the increasing demand.

“The financial capacity of the institution is still   low, specifically in covering or supporting the teachers’ loan demands,” said Joseph   Museruka, the Sacco’s Managing Director

This according to Museruka   is also attributed to  low interest rate that  stands  at 11 per cent which   drive   more  the high  increase  of portfolio in long term than   long term  savings and reducing profitability for the  Sacco financial   self-sufficient and sustainability

Moreover,  the delay  in disbursement   of government   subsidies  to   the Sacco’s accounts as well as  uncontrollable  teachers’  retrenchment have affected  the   positive performance of the  portfolio  in terms of quality  and  efficiency.

“But we  are  looking at ways  to  increasing   savings mobilisation and this is why we need   more government   support to have enough   finance to lend to  our clients,” he added

Indeed, the government in 2012  extend  over rwf 30 billion  to the  Sacco  to  lend to  teachers  in  a period of ten years, something that had  improved the   Sacco’s   loan  book as well as  its profitability.

For example,   by end of December 2013, Umwalimu Saccos had extended   over Rwf 58 billion up from  rwf 38 billion in  the same period  in  2012.

According to statistics from the Sacco, small business loans took a bigger proportion of the loan portfolio realised an upward trend from rwf 0.7 billion in 2009 to 26 billion in  2013,while agriculture  and livestock  loans increased from Rwf364 million in 2009 to Rwf 2.9 billion  in 2013.

The  Sacco also  indicates that  small  business  loans, agriculture, education  and marriage  loans are among the  loan  products that  members are  interested in while also  noting that the  Noon  performing loan  are at  its lowest  of 3.3 per cent.

Whilst, as of   end of December  2013, the Saccos  registered  a net profit  staggering  profit  of rwf 1.2  billion up this is due to  low interest  rates at  11 per cent up from   the  rwf 454 million  loss  it  registered  in 2009.

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