Local leaders and financial institutions operating in Nyaruguru district, Southern Rwanda, are upbeat after a Thursday’s access to finance forum meeting established that slightly over 70 per cent of the local population have been accessing loans to help them with micro finance, bankable projects geared towards combating poverty.
According to Fabien Niyitegeka, Nyaruguru district’s Vice Mayor in charge of Finance, Economy and Development, the move is quite unheard of in the district’s recent past – when a much smaller size of the population could interact with banks and micro finance institutions.
“We have made a significant step forward”, says Vice Mayor Niyitegeka. “And now 72 per cent of the population [now estimated at 280,000] can get access to loan money”, he adds.
And in fact, figures from the National Bank of Rwanda (NBR) apparently back up the scenario.
NBR’s data dated September suggest that Nyaruguru-based Saccos (Savings and Credit Cooperatives) had, by then, granted loans worth Rwf 186,876,734 to the local population out of loans worth Rwf 13.45 billion granted in Saccos countrywide.
According to NBR, in a separate report dated November, 76,5 per cent of those who accessed loans through Sacco in Nyaruguru are men, 22,1 per cent are women and 1,4 per cent are groups of people or associations.
With such a low female proportion, participants to the meeting hope the newly launched system to ease business for women and the youth will help reverse the trend.
Through BDF (Business Development Fund), the Rwandan government – via the Ministry of Youth and ICT (Information and Communication Technologies) and the Ministry of Gender and Family Promotion (MIGEPROF) − is set to be sharing the loan guarantee cost by paying up to 75 per cent of the total cost while the remaining 25 per cent will be the bank loan seekers’ business.
But another problem is surfacing, too.
“People are saving less than they are asking for loans”, an NBR’s clerk pointed out at the meeting.
And not that alone.
As Nyaruguru’s Vice Mayor puts it, yes a total of 72 per cent of the population have been interacting with financial institutions therefore being in a position to access loans, but only 48 per cent have been doing so in a formal way while the remaining 24 per cent have been so doing in an informal way through some community-based co-ops, mainly based on mutual trust of their members.
There might be some light at the end of the tunnel though, according to Ephrem Nsengiyumva, Manager of BDC (Business Development Center) in Nyaruguru district.
Nsengiyumva says the few people still in the informal financial sector will, with time, end up in the formal sector where, as he puts it and in contrast with the informal sector, “the money is safe enough and sustainability guaranteed.”
“With sensitisation, more and more people are getting the courage to ask for loans [within the formal financial sector]”, says Nsengiyumva whose job mainly deals with the study of bankable projects for the population.