Intiti Magazine - SACCO

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“Teachers’ savings and credit cooperative, Umwalimu SACCO, has donated Rwf 40 million towards the Agaciro Development Fund.”

The General Assembly of SACCO Icyerekezo-Kinyinya has elected new leadership to replace the out-going Team.

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Africa Improved Foods Rwanda Limited Tel: (+250) 788 389 516 / 1717 E-mail: info@africaimprovedfoods.com Web: www.africaimprovedfoods.com

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CUSTOMER TESTIMONIALS I am a Primary School teacher at G.S CYATO in Nyakarenzo Sector in Rusizi District since 2007 and I was given a project loan of Frw 700,000 in 2010 and started up a small shop dealing in selling food crops and it was managed by my husband. To improve on my business, I have applied for and was granted another loan amounting to Frw 1,650,000 in 2012 payable within 5 years. In February 2016, I was granted another loan of Frw 8 000 000 and built a commercial house in my residence where deals in distribution of Bralirwa products. I proudly earns Frw 900,000 per month out of this business. I am very thankful to UMWALIMU SACCO products and services and promise to continue offering jobs to the community.

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INSIDE THIS ISSUE

Customer Testimonials Umurenge Saccos Play Critical Role In Fighting Poverty

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Umwalimu SACCO

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Gahunda za Koperative Umwalimu SACCO

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Umwalimu SACCO, Open More Brances

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Umwalimu SACCO, Accelerate teacher welfare

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Challges of SACCO

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Saving Mobilization

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Intiti Magazine Umurenge SACCOs is a Rwandan based savings credit and co-operatives whose objective is to pool savings for the members and in turn provide them with credit facilities. Other objectives of SACCO are to encourage co-operation among members, teach them proper investment practices and also proper money management. Unlike banks the Sacco are primarily formed to raise the social welfare of members.

The Saccos have managed to establish themselves in different localities.

Whereas in urban areas wage and salary earners have formed Urban Sacco, in rural areas, farmers have formed Rural SACCOs. There are also traders, transport, agakiliro formerly called agakinjiro and community.

Many people who initially used to keep money in holes from their houses and in suitcases are getting involved in Umurenge Sacco program and have opened savings accounts and this is sign that the institution is yielding.

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The SACCOs initially established in each and every umurenge of the country and membership has grown from 1.6 million people to as many as 3 million and number about 478 Country

UMURENGE SACC ROLE IN FIGHT wide.

The basic structure of the Saccos and credit unions is what differentiates them from banks; they are user-owned financial intermediaries, the dividends from these co-operatives are shared equally among members because they have got equal shares. Members typically have a “common bond” based on geographic area, community, employer, industry or other affiliation.

Each member has equal voting rights regardless of their deposit amount or how many shares they own. Their principal products are savings

and credit, however some offer money transfers, payment services and insurance.

SACCOs sometimes join together to create second-tier associations for the purposes of building capacity, liquidity management and refinancing; these second-tier associations can play a useful role in monitoring.The basic structure of the Saccos and credit unions is what differentiates them from banks; they are user-owned financial intermediaries, the dividends from these co-operatives are shared equally among

Intiti Magazine and tend to have very little major external support.

They do not require donations from outside resources to start-up since it is funded through members’ deposits, which makes the process simpler and more straight forward.

COS PLAY CRITICAL TING POVERTY members because they have got equal shares. Members typically have a “common bond” based on geographic area, community, employer, industry or other affiliation.

Each member has equal voting rights regardless of their deposit amount or how many shares they own. Their principal products are savings and credit, however some offer money transfers, payment services and insurance. SACCOs sometimes join together to create second-tier associations for the purposes of building capacity, liquidity management and refinancing; these second-tier associations

can play a useful role in monitoring.

The key elements of a SACCO are the credits and savings products. Unlike most micro-credit NGOs and institutions they provide a savings product which offers interest and a return on their deposits, which provides a new income stream for the individual and can either be reinvested or withdrawn for use.

SACCOs can be started with relative ease. They are typically started by a group with a ‘common’ bond’ such As carpenters, farmers, teachers, artisans or women

Financial Cooperatives are therefore, created in situation where people cannot obtain essential services from investor’s owned banks or firms. The Cooperatives may reduce the obstacles faced by the farmers or other people and encourage them to create the income generating activities; the financial Cooperatives participate in poverty alleviation.

SACCO is an easy way of organizing a community to save and recycle savings in a given locality. Since the nature of a SACCO is local, it mobilizes savings locally, within the community, and then the profits are returned to members in the form of loans (MINICOFIN, 2007). The money stays and works within the membership and the area. This mutually achieved success helps not only build a sense of ownership and pride in an area but also create a culture of saving and investing.

The benefits from the

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Intiti Magazine cooperative and saving schemes according to members has been far reaching. Since Members can form tiers within the cooperative some members without security have been able to access funds for working. This has been so because these tiers use their available deposits as security in case there is someone who defaults.

Also members have managed to gain financial literacy. This has been so because when members come together they exchange ideas on money management and investment issues which expand their knowledge.

The Sacco’s has reduced unemployment in that these cooperatives must employ people who have to work for them like accountants, managers , loan officer, cashiers and recovery officers.

Also the money borrowed is used for investment by small and medium investors who in turn provide jobs in the due course.

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Most of these cooperative have managed to construct their own properties and offices in different communes (imirenge) of the country by doing so they have contributed to the economy in the infrastructure development sector and has also contributed to job

creation.

In education sector these cooperatives do provide loans to parents who need funds to clear their children’s tuition and school dues and pay back when they get money.

For agriculture co-operatives members have been able to access loans to purchase fertilizers for making their land more productive. This has led to increase in harvests and increase in incomes has raised the welfare of members. They have been able to get access to mutuelle de santé, pay their children’s tuition and others managed to have access to electricity and water.

Though the interest rate is high compared to the banks (2%)/month and has been used as flat method but with the introduction of the declining method this is expected to fall in the due course.

Workers pack chili peppers at Dubai Ports World Kigali facility in Masaka, Gasabo District. Chili is among Rwandan products being exported to China under the electronic World Trade Platform. / Photo: Courtesy.

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UMWALIMU SACCO Profile UMWALIMU SACCO is a Savings and Credit Cooperative for the Rwandan Teachers mandated to empower the members towards uplifting their social-economic welfare and to contribute to socio-economic development of the community in which they live. This noble cause was initiated by the President of the Republic of Rwanda, His Excellency Paul KAGAME. Mobilizing a pool of savings and later be offered loans at competitive interest rate are the core activities of the cooperative.

UMWALIMU SACCO was created in June 2006 as per Ministerial Order nº 43/15.00/06 dated 21st June 2006 and accepted by the National Bank of Rwanda (BNR) to operate as Financial Institution on 22nd February 2008 as per Microfinance License nº 698 issued on November 24th 2009 by BNR. It was also recognized by Rwanda Cooperative Agency (RCA) on 16th August 2010 and was issued a cooperative certificate with reference RCA/995/2019.

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Umwalimu SACCO’s underlying objective is to foster the social-economic welfare of the Rwandan teachers. To achieve this, Umwalimu SACCO is focused on the following: • Increasing the capital base to meet members’ needs and demands for the SACCO’s products; • Becoming a national and regional model cooperative and leader in its chosen line of business; • Improving the management processes and therefore cost efficiency and achieving high returns on investment without subsidies;

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• Achieving high repayment and recovery ratios on loans; • Expanding market access in the countryside and rural areas by promoting agriculture sectors to improve food security among teachers’ household; • Improving operational efficiency; • Applying good corporate governance practices and community citizenship.

Core value • Objectivity • Integrity • Team work • Accountability • Efficiency and Effectiveness

Vision and mission Vision To be a MODEL SACCO in the country, offering high quality, yet affordable financial services to its members.

Mission To mobilize the pooling of savings from members through a check-off system, and grant credit for both productive and provident purposes at competitive rates of interest by professionally qualified and empowered personnel, using modern technology that is capable of enhancing the quality of the financial services to its members.

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Gahunda za Koperative Umwalimu SACCO Zahinduye Ubuzima bwa Mwarimu Koperative Umwalimu SACCO ni Koperative yo kuzigama no kuguriza abarimu n’abandi batanga serivisi zishamikiye ku burezi yashyizweho ku gitekerezo cya Nyakubahwa Perezida wa Repubulika Paul Kagame. Kuri ubu, ikomeje gufasha abarimu gukataza mu iterambere.

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Muri iyi myaka 24 ishize u Rwanda rwibohoye, gahunda za Koperative Umwalimu SACCO zahinduye ubuzima bw’ umwarimu. Hakozwe byinshi mu iterambere rya mwarimu bivuye muri gahunda nshya zashyizweho zo kuzamura imibereho n’ubukungu bya mwarimu, bituma umwarimu agira aho ava ubu afite aho ageze mu iterambere.

Mu kiganiro n’Imvaho Nshya, Uwambaje Laurence, Umuyobozi Mukuru w’ Umwalimu SACCO yagarutse ku mpamvu Umwalimu SACCO yatekerejwe.

Yagize ati, “Impamvu Umwalimu SACCO yatekerejwe, kwari ukugira ngo abarimu bishyire hamwe batange ubwizigame bwabo bushyirwe hamwe hanyuma ikigo kibafashe guhabwa inguzanyo ku nyungu nto ugereranyije n’iyo

bahabwagaho mu yandi mabanki ndetse bagire na koperative yabo bisangamo.”

Bamwe mu barimu bafite ubuhamya bukomeye bw’ukuntu gukorana n’umwalimu SACCO byabateje imbere Uwambaje avuga ko iyo urebye inyungu yatangwaga mu yandi mabanki aho igeze ubu ku mpuzandengo ya 17% ariko abanyamuryango babo bo bakaba babasha guhabwa inguzanyo ku nyungu ya 11% na 14% ku barimu ba Leta ndetse no ku barimu bo mu mashuri yigenga ,usanga ari ikinyuranyo cyo kwishimira dore ko bifitanye isano no kwesa imihigo bari biyemeje yo gukora nk’ikigo k’imari, harimo kwakira ubwizigame bw’abanyamuryango na bo bagafashwa kubona inguzanyo zibafasha gukemura ibibazo bitandukanye ndetse n’

izibafasha mu mishinga itandukanye bakora yabafasha kugira ikindi biyongereraho nyuma y’umushahara bahabwa.

Ni na yo mpamvu Leta y’u Rwanda itahwemye gutera inkunga Umwalimu SACCO kugira ngo abarimu babashe kubona inguzanyo ku nyungu ntoya ugereranyije n’ahandi.

Kugeza ubu, abenshi mu banyamuryango ba Koperative babashije kwiteza imbere mu buryo butandukanye: bamwe basezereye ubukode bubaka amazu yabo, abandi ntibagicungira ku mushahara wabo gusa kugira ngo ubuzima bwabo bukomeze ahubwo bafite indi mishinga ku ruhande ibyara amafaranga.

Imwe mu nzu ijyanye n’ ikerekezo yuzujwe n’ umunyamuryango w’ Umwalimu Sacco Byongeye kandi abarimu

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bashyiriweho uburyo bworoshye ku bijyanye n’ inguzanyo bafata mu buryo bwihuse ziswe ‘over draft’ na ‘emergence’ bashobora kuyihabwa mu minota 5 gusa bageze kuri SACCO ndetse no ku Murenge SACCO kubera amasezerano y’ubufatanye.

Ni mu gihe inguzanyo ku mushahara uyu munsi itangwa kugeza ku myaka itatu (salary advance) bayihabwa kuva ku munsi umwe kugera kuri 2, habamo ikibazo bikageza kuri itatu.

Inguzanyo zo kubaka cyangwa kugura inzu n’iz’ imishinga y’ubucuruzi, ubuhinzi cyangwa ubworozi ndetse n’ubundi bwoko bwose zo zitindaho gato kuko zo zisaba ko hakorwa ubusesenguzi bwimbitse hagamijwe kubafasha kuyibaha mu buryo butazabaremerera ariko na zo iyo ibisabwa

byose bihari ntizirenza igihe kiri hagati y’ibyumweru bitatu na bine .

Abarimu bishyura neza Ibijyanye no kwishyura inguzanyo, abarimu bashimwa kwishyura neza kuko hari uburyo bwo gukurikirana uko umushinga ushyirwa mu bikorwa dore ko ubusanzwe umushinga upfira mu kuwushyira mu bikorwa nabi.

Kugeza ubu ibipimo by’ inguzanyo zitishyurwa neza ntibikanganye. Uwambaje atanga urugero “Nk’urugero uje akeneye inguzanyo y’ umushinga wo korora inkoko turawiga, tukawukorera ubusesenguzi, tukayamuha ariko noneho tukayamuha mu byiciro, tukajya tugenda dukurikirana uko ashyira mu bikorwa wa mushinga ari nako dukora raporo y’ibimaze gukorwa tukabona gutanga ikiciro

gikurikiyeho.”

Ibi kandi abanyamuryango bakaba babyishimira kuko babona bibafasha gukoresha amafaranga bahabwa mu nguzanyo icyo yagenewe .

Kugeza ubu, muri rusange ni nkaho abarimu bose bamaze gufata inguzanyo zijyanye no gukemura ibibazo bya buri munsi.

Hagamijwe gukomeza kuborohereza kubona serivisi nziza kandi hafi, uburyo bwo gukoresha ikoranabuhanga bwahawe agaciro .

By’akarusho, nyuma yo kubona ko ubwizigame buhoraho budahagije, abanyamuryango bakangurirwa umuco wo kwizigamira ku bushake kugira ngo na koperative yabo izarambe kandi na bo barusheho guteganyiriza ibyo bateganya gukora mu gihe kiri imbere Koperative umwalimu SACCO irifuriza Abanyarwanda bose isabukuru nziza yo kwibohora.

Ubuyobozi bwa Koperative Umwalimu SACCO burifuriza Perezida wa Repubulika, Abanyarwanda bose, Ingabo z’Igihugu (RDF) na Polisi y’ Igihugu umunsi mukuru mwiza wo kwibohora ku nshuro ya 24.

Muri iki gihe u Rwanda rwizihiza umunsi mukuru wo kwibohora, abarimu barasabwa kugira umuco wo kwizigamira bakomeza kwibohora no ku bukene. Baributswa ko Umwalimu SACCO ihari kugira ngo ibafashe kwiteza imbere ari nako hanatezwa imbere segiteri y’uburezi muri rusange

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Umwalimu SACCO, has donated Rwf 40 million towards the Agaciro Development Fund.

“Teachers’ savings and credit cooperative, Umwalimu SACCO, has donated Rwf 40 million towards the Agaciro Development Fund.”

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Handing over a dummy cheque to the Fund’s manager, Vianney Kagabo, yesterday, Jean Marie Nzagahimana, the chairperson of Umwalimu, said the funds were raised

from monthly contributions from members of the SACCO and its annual profit for last year.

“Apart from focusing on improving the lives of teachers, we also want to contribute to the socio-economic development of the country by contributing to this fund,” Nzagahimana said.

The State Minister for Economic Planning, Uzziel Ndagijimana, lauded the

SACCO’s efforts and said the Fund, which currently stands at about Rwf26.2 billion, should grow to enable Rwanda become an aid-free nation.

Kagabo, on the other hand, said the funds were still being invested in form of bank deposits, earning an interest of around nine per cent per year as they weigh the options to diversify into investing in equity projects and the debt market.

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UMWALIMU SACCO TO OPEN MORE BRANCHES Umwalimu Sacco, the teachers savings and credit co-operative, will next month open ten more branches as part of its expansion programme.

Umwalimu Sacco, the teachers savings and credit co-operative, will next month open ten more branches as part of its expansion programme.

This was revealed by the cooperative`s managing director, Joseph Museruka.

“We shall make sure that the branches get connected to our server in the shortest time possible to enable teachers access their February salary from the new offices,” Museruka said in an exclusive interview.

The institution will open branches in Kamonyi, Nyaruguru, Gisagara, Nyabihu, Burera, Gakenke, Rulindo, Ruhango, Kicukiro and Nyarugenge districts.

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More five branches will also be opened at the provincial level in a move designed to facilitate implementation of decisions made at the headquarters.

“We want to decentralize our activities and this will help us effectively carry out our activities. Our agents will be in the field closely monitoring and identifying the challenges that may hinder the smooth implementation of our programme,” he said.

He explained that teachers will also be trained

on cooperative operations to encourage them to form such unions.

“The maximum amount teachers can get as loan was increased to Rwf15 million.

But the easiest way to secure this type of loan is to form cooperatives because they (teachers) can easily come up with bigger projects,” he said.

Cecile Mukankusi, a teacher said of the development: “There are cases that have been forcing teachers to come to the headquarters, but I believe such cases will instead be handled at provincial offices”.

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Umwalimu Sacco accelerates teacher welfare through savings The growth of any economy depends on capital accumulation, which in turn depends on investment and an equivalent amount of savings to match it. Two of the most important issues in development economics and for developing countries are how to stimulate the investment and increase the level of saving to fund it.

It is in this line that UMWALIMU SACCO was established with the initiative

of his Excellence President Paul Kagame to cater for the welfare of teachers. Umwalimu SACCO was created in 2006 and it was licensed in 2008 by National Bank of Rwanda (BNR) to operate as a Financial Institution offering different financial services to its members.

Today it has 30 branches, one in each district, and has grown in terms of equity and members with a total

number of almost 78,333 active accounts. Members have easy access on their accounts at all Branches of Umwalimu SACCO and Umurenge SACCOs through an interface technology.

Umwalimu SACCO’s saving culture has been a tremendous success in addressing teachers’ financial needs and has catapulted teachers out of poverty.

Umwalimu SACCO engages in two principal activities which include managing members’ savings got from their monthly deductions of 5% of the member’s net salary through a check-off system.

These savings are made as permanent savings

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Intiti Magazine /Compulsory savings and serve as guaranty when giving loans to members.

They are remunerated at 4% every year.

Umwalimu SACCO has also a free savings account through which all the money the member have transit before they are channeled to other subaccounts according to the client willing.

In order to encourage teachers to save for their future, Umwalimu SACCO has developed voluntary saving products made under contractual terms and conditions. They include the following savings types: School fees saving account:

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It has a Competitive interest rate depending to the amount and the period saved, allow members planning to save for their children’s school fees and themselves; then, members are able to pay school fees on time and preserve their dignity.

Home furniture saving account: It has a competitive interest rate depending on the amount and period saved, easing the start of the home life. Allow members to access to quality equipment which can serve as loan collateral.

Children saving account: Umwalimu SACCO offers savings account designed specifically for children development. The parents may begin to save money for

their children using this type of account for the secure future of their children.

Fixed/term deposit accounts: It has an interesting and competitive interest rate depending on the amount and period saved. It increases wealth with high return to the members. Through the mobilization of those different Savings product from members, Umwalimu SACCO grants different types of loans to its members.

Other services offered by UMWALIMU SACCO to its members are trainings on Business Management game, project elaboration, basic front office banking services and so forth.

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New Faces in SACCO ICYEREKEZO-Kinyinya

The General Assembly of SACCO Icyerekezo-Kinyinya has elected new leadership to replace the out-going Team which has faced tougher times in the past two years comparing to previous years.

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In the past two years various reports whether from Media or individuals indicated that there was a mismanagement of SACCO Icyerekezo Kinyinya which resulted into the interest drop from Rwf 12 million in 2017 down to Rwf 4 million in 2018 Officials said “The Manager of SACCO Icyerekezo Kinyinya whom the outgoing Management has sacked has abused the Kinyinya SACCO office to the point she tricked them until they committed a very

serious mistake by aproving fake financial documents for which they are regretting.”

Speaking at the General Assembly of SACCO Icyerekezo Kinyinya, Mutsindashyaka Andre the outgoing President of the said SACCO apologized to all members saying that “We are regretting the recklessness during the past two years where a Manager (Niwemugeni Chantal) has tricked us until we realized that there is something wrong going on in the SACCO.” The Private Audit report has indicated that Niwemugeni Chantal (sacked) has willingly mismanaged SACCO Icyerekezo to the point she even used favoritism and nepotism when she was

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signing the release of credit and loans. “Imagine! The audit showed how Niwemugeni’s reports that she used to send to the District were very different from the reality. Based on the findings if Niwemugeni was still here today, we should have immediately sacked her. She has totally abused her office and she deserved the dismissal.” said Ronjin Kagabo a SACCO Auditor at Rwanda Cooperative Agency.

According to officials apart from the mismanagement of SACCO Icyerekezo Kinyinya, there were also other issues which needed a quick responses among them no team work among employees where they used also to fight each other in the office, there are missing documents until now no one knows their whereabouts, credits that were given to people but can’t be traced because of lack of their financial statements among many others.

“It’s obvious that when we started to make a follow up to find out real issue in the SACCO, the Manager took away all documents to hide the reality of things in

her office.” Mutsindashyaka 2018 we have recorded explains. interest of Rwf 4,701,097 with the drop down of Even if SACCO Icyerekezo over Rwf 8 million. This is Kinyinya was hit by the the proof that there was a above mentioned crisis, mismanagement of the available statistics shows SACCO,” Nsengiyumva added Leave sentimentality behind Both RCA and Out-going Board Team of SACCO Icyerekezo Kinyinya advised the new elected Team to leave sentiments behind if they are to avoid same mistake.

Mutsindashyaka said “It is obvious that my team has used sentimentality when it was dealing with challenges that SACCO that SACCO Icyerekezo was facing. We should not Kinyinya is still safe from have committed such the loss. mistake if we were tough “Really as a result of the mismanagement, what happened is that there was a drop of Interest and issues in loan recovery because there are no documents related to the loan or people with collateral whose value is on dealing with the less than the loan given.”Manager. What we did, Explained Nsengiyumva Simon the new Manager of we were trying to bring her in the right way while SACCO Icyerekezo reminding her responsiKinyinya. bilities but what we didn’t “In 2017 we have record- know is that we were not ed the total interest of aware of the heaviness of Rwf 12,806,836 and in

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the problem. So avoid recklessness in decision making.”

After swearing in the new elected team, the Executive Secretary of Kinyinya Sector Umuhoza Rwabukumba reminded them that the primary responsibility is to make sure that SACCO is developing and members are developing.

“As representatives of other members, your role is to bring positive change in the SACCO and among beneficiaries. SACCO is not that building! SACCO is your constructive ideas. Being elected by members’ means you are able to bring that change.” She says.

On behalf of the new Team Sezikeye Jacques the New President of Kinyinya SACCO pledges to do whatever in their capacity to bring the Saving and Credit Cooperative to another level.

“We thank the outgoing Team and we have heard the advices you gave us, we promise our effort in addressing what is not addressed. You have done a lot since the creation of this SACCO even if those challenges arisen but you did a lot.” He noted.

To date the social capital in Kinyinya SACCO stands at Rwf 83 million while the total deposit is over Rwf 400 million.

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Intiti Magazine Savings by members have disappeared and several of the managers now have cases to answer. These savings schemes are key to the development of the country, especially the rural populations.

We cannot let them collapse just because of inefficiencies. The major challenge has been with the people in charge of the day-to-day operations of the SACCOs and the people they directly report to.

While there is no expectation to have the best accountants or financial managers at the helm of the SACCOs, the least the members deserve are people of integrity to be in charge.

Then there is basic training on professionalism. This involves zero tolerance towards flouting procedures and processes that guide the operations of the SACCOs. Equally important is a framework to ensure members are consulted on any decision that concerns these SACCOs, and not at the discretion of their managers.

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Furthermore, putting in place harsh penalties for those who deliberately cause

CHALLENGES OF loss of funds will also go a long way in deterring malpractices.

The objective is not to be harsh but to inspire great management practices.

And for the managers who help grow the funds and efficiently manage the SACCOs, there should get attractive incentives that include bonuses.

One of the issues highlighted is non-performing loans. These too can be

minimised if there is a thorough vetting of applicants and strictly follow up of those who get the loans.

If these two processes, which are also part of good management practices, are carried out professionally, then the SACCOs will successfully serve the role for which they are created.

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The Ministry of Finance announced, early this week, that Umurenge SACCO—an initiative aimed at extending microfinance services to the low income segment in Rwanda has managed to save more than Rwf10 billion by the end of the first quarter of 2011.

F SACCO “Addressing Umurenge SACCO challenges will empower the Village”

The Ministry of Finance announced, early this week, that Umurenge SACCO—an initiative aimed at extending microfinance services to the low income segment in Rwanda has managed to save more than Rwf10 billion by the end of the first quarter of 2011.

With 1,155,000 registered members, the initiative is turning out to be one of the most effective community empowerment programmes that the government has used to remarkably facilitate economic and social growth as well as reduce poverty.

The programme was designed to address low domestic savings and financial exclusion of a larger perceentage of the population, especially rural communities.

It is also in line with the

national microfinance policy, the nationalmicrofinance policy implementation strategy, and the national savings mobilisation strategy.

However, recently members of Parliament expressed concern over various challenges within Umurenge SACCO including, ownership, infrastructure, auditing and human resource which, if not addressed, may undermine their role as financial intermediaries to provide financial services to the rural population.

The relevant authorities must, therefore, take this issue seriously and up their sensitisation campaign about the programme in order to bring more people on board.

Long term strategies must be crafted in order to encourage Umurenge SACCOs to apply microfinance best practices.

Ultimately this will create sustainable SACCOs with diversified savings and loans products and able to protect members’ deposits.

This will not only help rural Rwandans to access money for investing in income generating activities but would also boost the country’s MDGs ambitions.

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SAVINGS MOBILISATION Savings is a key source of funds for many financial institutions including the Umurenge SACCOs. The low interest paid on the savings compared to other sources of finance for the SACCOs means that the Umurenge SACCOs can be able to lend to their members at the low interest rate and still be able to post modest profits that will also be shared by the membership as dividends.

Proper savings mobilisation is therefore very critical for the eventual success of the Umurenge SACCOs. This unit looks at how the Umurenge SACCOs can be able to

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develop and implement a good savings mobilisation strategy thereby obtaining low cost finances which in the long term will make them self sufficient thus being able to survive even without external support from partners like RCA. By the end of this unit, the participants should therefore be able to: • Understand the importance of savings mobilisation to the Umurenge SACCO • Comprehend the critical organisational aspects for effective savings mobilisation by the SACCO

• Develop and implement a savings mobilisation strategy for the Umurenge SACCO • Know the different forms of the savings product • Understand the process of developing appropriate savings products for the SACCO • Effectively manage the Umurenge SACCOs members’ savings

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TYPES OF SAVINGS PRODUCTS The Umurenge SACCO members have the urge to develop and to make their lives better.

The question remains therefore “How can they make their lives better?” Saving for the future is one of the ways that they can improve on their livelihood. It is therefore essential to know the various savings products available so that one makes the best choice and selects what suits them best. Savings products can broadly be classified in to three namely; • Compulsory savings products • Voluntary savings products • Contractual savings products.

1. Compulsory Saving: These are funds that must be contributed by all members of the SACCOs as a condition of membership and in some instances to access credit (loans). Compulsory savings can be considered as part of a loan product rather than actual savings product since they are closely tied to receiving and repaying loans. Compulsory saving is a saving that a member is forced to make on regular basis; it is a membership saving and must be saved

on a weekly or monthly basis.

This compulsory saving is collected to on lend to members. If members fail to save on time they will get penalized based on the saving policy of the society. Unless the member quits from membership, he or she should save on regular basis. If a member wants to withdraw from the SACCO, he will have the right to take this compulsory saving.

The SACCOs are supposed to provide interest for this savings. There are 2 kinds of compulsory loans i.e.

• Group saving: composed of a certain percentage of the loan portfolio contributed monthly or weekly.

Saving continues through the loan period and therefore protects the portfolio on one hand and serves, as an investment fund for economic ventures of the group members to supplement the loan in case of emergency needs.

• Personal or individual saving: This is where each borrower is required to save a minimum amount per month but motivated to save more voluntarily.

2. Voluntary Saving:

Voluntary savings are savings, not for access to credit, but for the sake of saving. These are not an obligatory part of accessing credit services. They are provided by both the borrowers and non borrowers who can deposit or withdrawal according to their needs.

The interest rates paid are relatively low compared to the interest rates paid by larger financial institutions.

The voluntary savings are best fit for people who don’t receive constant cash flow like farmers who get incomes when they sell off their produce once or twice a year. They can make voluntary saving during harvest time, and transfer monthly to their compulsory saving accounts. Farmers, and other individuals, can save the full amount for the coming year’s compulsory savings in advance with the SACCO by depositing 12 months worth of saving in a voluntary account.

Following that, each month on the appropriate day the member will come to the SACCO to withdraw the amount of one month’s compulsory saving from the voluntary saving -account and deposit it in the compulsory saving account. This maintains the

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Intiti Magazine fundamental function of the SACCO and allows individuals with seasonal incomes to be members. This ensures regular flow of cash to the SACCO society and promotes members participation. This kind of saving can be withdrawn at any time when the owner needs it.

The SACCO society may or may not provide saving interest for this voluntary savings. Farmers are highly advised to save on voluntary saving for small capital investment like purchasing seed for cultivation.

3. Contract Saving: These are the kind of saving accounts were by the person saves to meet a particular goal.

These include: 1. School fees savings accounts: This is the type of account used by most parents so that they are able to save for their children’s education.

2. Target Savings Accounts: This is where the client opens up an account particularly to meet a particular target like buying land, paying a mortgage among others.

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3. Fixed Deposit Accounts: This is the savings accounts were by a person deposits once and they withdraw the money after a period of time.

The time ranges from 3 months onwards.

This kind of saving is not used by most SACCOs unless the

SACCO has acquired and mastered the good skills in managing the loans and savings effectively. It can be shortterm saving like if someone wants to pay school fees; he may save to pay school fees. It can also be long term like fixed deposit accounts were time deposit bring the opportunity of high interest rate on savings. This kind of saving is good in the future when the SACCO is in a good capacity and position of managing its savings and loans properly and if there is a shortage of feasible financial demand by members. This kind of saving can be collected from members and none members but the amount, period of collection and interest for this saving should be decided by the General Assembly of members.

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