Cooperative bank needs Rwf 5bn to start

 Francois Kanimba

Francois Kanimba

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.

 

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