Rwanda: What to Expect From Automation of Umurenge Saccos

11 June 2024
The New Times (Kigali)
By Michel Nkurunziza

The automation of all 416 Umurenge SACCOs will boost savings, financial inclusion, financial service delivery, innovative financial products and end fraud according to financial experts.

Despite the formation of 416 U-SACCOs in 2009, these institutions have faced operational challenges, including manual business operations, limited scope of business, and a lack of digital financial services for members.

The automation project which started in 2014 involves transitioning U-SACCOs from manual to automated management information systems for improved efficiency and member service.

The completion of the automation phase of all 416 UMURENGE SACCOs operating in Rwanda's 416 administrative sectors, on Monday, June 10, marked a pivotal moment in the journey towards enhancing financial services paving the way to their consolidation into District SACCCOs (D-SACCOs) that will later form the establishment of a cooperative bank.

Speaking to The New Times, Jackson Kwikiriza, the Executive Director of Association of Microfinance Institution of Rwanda (AMIR), said that Umurenge SACCOs comprise over 85 per cent of 458 Microfinance Institutions (MFIs) across the country while MFIs comprise 43 per cent of financial institutions in Rwanda.

"This shows the huge contribution of automation of Umurenge SACCOs to the development of the financial sector in Rwanda. Automation is a huge achievement in terms of financial inclusion. It will reduce time and money spent walking long distances going to the financial institutions. Savings and liquidity will also increase as members can easily deposit or save and withdraw using mobile phones," he said.

He said depositing and withdrawing money on the accounts in UMURENGE SACCOs using mobile phones will also boost penetration of smartphones and improve digital and financial literacy.

According to the 2020 FinScope Survey Report, 93% (from 89% in 2016, 72% in 2012 and 48% in 2008) of Rwandan adults are financially included in terms of accessing and using both formal and informal financial products.

"With automation of Umurenge SACCOs, we can reach 100 per cent. That is on the side of customers. For the SACCOs, there will be performance improvement, efficiency in operations, quick service delivery, innovative and digital financial products for all categories including women and youth, farmers, green projects and others. This means more jobs will be created as savings and loans are eased under automation," Kwikiriza said.

With the implementation of automated systems, U-SACCOs eliminate the need for physical journals and offer real-time mobile notifications to members. The introduction of mobile banking services enhances accessibility and convenience for members, enabling transactions anytime, anywhere.

Nyamasheke District vice Mayor in charge of Economic Affairs, Joseph Desire Muhayeyezu, said that many projects' beneficiaries get their wages through SACCOs.

However, they were spending a lot of time in queues to get their money due to lack of SACCO automation citing an example of Kagano SACCO which started operations in 2010.

Kagano SACCO started with providing up to Rwf600, 000 loans and that has been increased to Rwf5 million per member.

The institution now plans to provide up to between Rwf7 million and Rwf10 million per one person for traders, farmers, traders, fishing community, transport, artists, among many others at 18 per cent interest rate per year.

There are 15 Umurenge SACCOs in Nyamasheke District and two SACCOs for tea farmers' cooperatives with 166, 540 members.

"So far 1/3 of Nyamasheke residents are members of SACCOs," Muhayeyezu noted.

"When Umurenge SACCO was established in 2009, we breathed a sigh of relief since we used to spend 12 hours to reach a bank. Now that digital technology will enable us to save and withdraw using our phones, our savings will increase and more people will think of small projects," said Fabien Ntawigira, a resident of Murambi Sector in Nyamasheke District.

Cyrille Hategekimana, the Director General in charge of banking and non-banking services at the ministry of finance says having District SACCOs and a cooperative means every member will deposit, withdraw their money and make transactions while in any district and sector across the country.

"As more people save in SACCOs, the loans will also be increased for members to implement different projects," he said.

Read the original article on New Times.

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