5. SAVINGS AND INTERNAL LENDING COMMUNITIES (SILC) 5.1 Background Access to financial services—savings, credit, and insurance—is of particular importance for adolescent girls, allowing them to support family members; cover basic household needs such as food and clothing; purchase personal supplies such as lotion; support business costs once the girls have graduated from their vocation training programs; pay for national health insurance or the mutuelle de santé; and save for the future. Youth in Rwanda, however, face many barriers to accessing financial assistance. The legal age for taking a loan from a formal financial institution is 21, regardless of the applicant’s gender or the source of the loan such as a formal bank or a registered microfinance institution (MFI). A person younger than 21 may take out a loan, but it must be co-signed by a guardian. If a young person is the head of her household and is not under adult supervision, her ability to access a loan from an MFI or a commercial bank before the age of 21 is virtually impossible. Other options for accessing credit include savings and credit cooperatives (SACCOs), credit unions, informal savings mechanisms such as rotating savings and credit associations (ROSCAs), accumulated savings and credit associations (ASCAs), or moneylenders. SACCOs are similar to credit unions in that members are encouraged to save and, at an appropriate time, are allowed to borrow. UMERENGE SACCOs, registered financial institutions started by the National Bank in each sector in Rwanda, do not stipulate an age limit to access credit. Because of easier access, several of the adolescent girls interviewed for this assessment indicated they participated in SACCOs. Still, SACCOs do place a few limitations on participants. For example, savers must build up their savings over a sometimes lengthy period of time (as much as two years in some cases) before they are able to access a loan. If a borrower had an urgent need for finance, this restriction could significantly hinder their ability to invest in productive activities. The availability of financial services to both youth and adults is also affected by inaccessibility of commercial banks, most MFIs and some SACCOs to rural populations. These formal
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