Complaints about inefficiencies of cooperatives in the country persisted for years. Allegations of embezzlement of savings by managers have often left sore experiences in the savings drive and the culture to operate in cooperatives for prosperity.
With the 2016/17 report by the Ombudsman the latest to cite corruption tendencies in cooperatives, especially at management level, Parliament decided there was need to reverse the trend.
As such, MPs summoned the Minister for Trade and Industry, Vincent Munyeshyaka, under whose docket cooperatives fall.
As well as the issue of mismanagement of SACCOs, the legislators put to ask officials from Business Development Fund (BDF) over concerns regarding its modus operandi.
Munyeshyaka and BDF officials yesterday appeared before the parliamentary Standing Committee on Political Affairs and Gender, which is examining the Ombudsman's report.
During the session, MP Theoneste Safari Begumisa cited an example of the teachers' savings and credit cooperatives (Umwalimu SACCO) where some members do not easily access loans because "someone in management has refused to endorse the applications for strange reasons."
Munyeshyaka said restructuring and streamlining of cooperatives' human resource management will go a long way in ensuring efficiency as well as reducing issues relating to bureaucracy, among others.
"There are about three steps to be taken to revamp the image of cooperatives," Munyeshyaka said, "one is to streamline leadership and increase member participation in day-to-day running of the cooperatives and establishing partnerships with security organs and local government to take up some roles in cooperatives."
Another step is to ensure that the ministry, as well as Rwanda Cooperative Agency, engage in the running of cooperatives on a more regular basis, he said.
According to MP Alfred Kayiranga Rwasa, the committee chairperson, the situation looks like cooperatives operate independently without regular checks from responsible organs.
Rwasa said constant evaluation would go a long way in not only creating financial sustainability but also transparency in cooperatives' management.
On BDF, the legislators said financial inclusion and access is still a challenge partly due to inefficiencies that characterise the Fund that at times give leeway to corruption to thrive.
The legislators noted that there are some individuals who connive with bankers to approve certain applications simply because they expect a "commission."
Some banks still ask for substantial collateral in addition to what BDF guarantee covers, the MPs said.
"Some banks are hesitant to give loans to BDF-backed loan seekers because there is no collaboration between BDF and the banks in this regard," MP Pelagie Mukantaganzwa said.
Kayiranga said some people simply do not know about the Fund's activities hence the need for BDF managers to create more awareness, especially at the grassroots level.
"Some banking institutions do not present regular reports to BDF, leading to ineffectual evaluation on the impact of BDF visa-a-vis its mandate. The Government must address such gaps," he said.
Jacquiline Nkwihoreze, the finance manager at BDF, acknowledged that sensitisation was a challenge the Fund has tried to address in so many ways, including campaigns as well as setting up as many branches as possible in all corners of the country.
However, Monique Umugwaneza, BDF company secretary, refuted allegations of corruption tendencies at the Fund, saying BDF doesn't give cash but guarantees to the banks.
Umugwaneza said should there be any cases relating to corruption, the Fund management would investigate the allegations going forward.
As of September, BDF had funded 24,420 projects amounting to over Rwf150 billion through credit guarantees, Quasi-Equity support to start-ups, managing matching grants, SACCO refinancing, and business development advisory services.
Formed in 2011 as part of the financial infrastructure to promote SMEs, BDF's objective is to assist SMEs to access finance, particularly those without sufficient collateral to obtain credit from traditional financial institutions at reasonable rates.