About Rwf1.2billion has been lost in unpaid loans borrowed by clients from various microfinance institutions across the country and the Central bank will have to pay.
Because of this big amount of money lost, microfinance institutions are advised to think twice before granting credit to any client – Unpaid debts affect the country’s economy.
The Association of microfinance Institutions in Rwanda (AMIR) in partnership with Small Enterprise Education and Promotion (SEEP) has set new strategies for the smooth functioning of microfinance with regard to credits grants.
“It is a very big challenge that people borrow loans they are not able to pay,” said Peter Rwema the Director of AMIR.
The new strategies launched today consist mainly of investigating loan applicants and ensuring they are trustworthy.
According to AMIR, more than 6 million of Rwandans above 18 years have bank accounts; however the big number have inactive accounts.
Straton Habyarimana, the Director of SEEP said that the competition among microfinance institutions is responsible for the growing number of debts because of recklessly giving out loans.
In Rwanda, there are over 470 microfinances including Savings and Credit Cooperatives (SACCO’s) that bank 64 percent of the money in all financial institutions.
AMIR said that now on the parliament is revising the draft law establishing operation of microfinance institutions.