Government Moves to End Woes in Umurenge Sacco Program

Service at Umurenge Sacco

A cabinet meeting yesterday approved plans to overhaul the financial and managerial issues in the Savings and Credit cooperatives (Umurenge SACCO) program as a way of solving set back in the scheme.

Umurenge SACCOs is a government of Rwanda initiative as elaborated in the Vision 2020 development agenda that aims to increase access of financial services to citizens.

To date there are 416 umurenge saccos in the country which were supposed to be automated by end of 2018.

The automation was seen as one of the steps towards forming Rwanda’s first Cooperative bank to tap in on more than 4 million members in 8,500 cooperatives under Rwanda Cooperative Agency (RCA) whose members urgently need a bank from which they can borrow at lower interest rates than those of other local commercial banks.

For such a bank to be established, Rwanda’s Central Bank provisions advised that the investor must have Rwf5 billion ($6million) of which the saccos had something in hand to propose.

As of September 2019 RCA and the Office of the Auditor General (OAG) had indicated there were approximately 9,200 cooperatives ready to provide 60% (Rwf3billion) of the needed investment and had been waiting for a potential investor to buy 40% shares for the bank to start.

This according to previous KTPress reports required that all the saccos had to be automated but these efforts were however frustrated by many reasons including delays in collaboration of concerned institutions and government contracting a foreign company to deliver the automation in vain.

The major plan behind the automation was to enable Sacco clients, who are mainly in rural areas to access their accounts anywhere in the country, a proposal that has till to date been under discussion.

The unautomated system also allegedly gave a platform to sacco officials to misuse funds resulting in over 200 of them being aligned for investigation for allegedly mismanaging funds meant to improve the lifestyle of farmers.

Though the issue was tabled to the office of the Prime Minister Dr Edouard Ngirente, the Auditor-General, Obadiah Biraro warned that failure to automate the system puts it into hands of fraudsters risking a loss of more than Rwf5billion due.

“If you cannot do it manually, then going automated is like engaging a gear five when you have not reached gear four which leaves the agency in more danger,” Biraro said then.

In a cabinet meeting held March 16, 2021, the Minister of Finance proposed the government to revamp the Umurenge Sacco financial management issues, which was given a green light.

This Tuesday, KTPress sought details of what this could mean after years of sacco users complaining of inability to access their funds anywhere in the country, but by press time there was no response.

However, the Central Bank Governor, John Rwangombwa told this reporter that the main overhaul will focus on having the Saccos automated as soon as possible as one of the key areas to ensure their effectiveness in the financial sector.

The move comes at a time when COVID-19 has impacted on the new loans approved dropping 8 percent lower from Rwf1,160billion approved in 2019 to Rwf1,066 billion in 2020, according to Central Bank Monetary Policy and Financial Stability Statement for the second half of 2020. 




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