Cooperative bank needs Rwf 5bn to start
The proposed cooperative bank requires an initial deposit of Rwf 5 billion for its establishment, the Minister of Trade and Industry Francois Kanimba said.
The Minister said that the bank, once established will provide a financial backbone to savings and credit cooperatives, which have been instrumental in rural financial inclusion.
Cooperatives are instrumental in providing opportunities for productive employment, as well as offering health care, education, potable water, improved sanitation, roads, and market access, while giving a stronger “voice” to rural groups.
“Under the arrangement, Umurenge Saccos will raise 60 per cent of the capital, while the remaining 40 per cent will be provided by the strategic investor,” Kanimba said.
“Therefore, the challenge is to identify an investor before the end of the year to kick-start the venture.” The Minister added
Stakeholders in the financial sector two years back called for the establishment of a cooperative bank to collect together the cooperatives’ savings as well as easing access to credit, a step that will see the Saccos’ liquidity increase.
This according to experts will mean that a cooperative bank working on savings from Saccos will be able to provide credit at a low interest rate to help also them( saccos) provide low interest credit to their members.
“Most loans that Saccos provide are small loans to its members and this means they need a specific bank that will look into their working environment and provide to them credit at low interest rate,” Damien Mugabo, Director general at Rwanda Cooperative Agency said
The government, a bid to increase financial inclusion for all mainly in rural areas, established Umurenge saccos to help the un-bankable populations access formal financial services .
According to fin scope survey 2012, the number of adults that were financially excluded dropped to 28% (1.3 million adults) from 52% of adults In 2008 with 72% around 3.2 million adultswere using financial products or mechanisms in 2012.
“Cooperatives play a major self-help role in rural areas; particularly where private businesses hesitate to go and public authorities do not provide basic services,” Mugabo added
Mugabo say that the establishment of the bank will also help boost the ongoing efforts to streamline services for the Saccos such as computerization to increase their capacity to extend services to their members.