The much-awaited introduction of an umbrella co-operative bank in the country has been put on hold pending reforms in the savings and credit societies (Saccos).

The bank, which is expected to act as a central financial institution for over 416 sector-based Saccos in the country and take up their day-to-day supervision, was scheduled to start operations by end of last year.

However, Trade and Industry Minister Francois Kanimba said the government has had to push back the plan, pending the automation of the Saccos, an exercise expected to be concluded by June next year.

“The studies to guide the operation of the bank were finalised, but we couldn’t proceed when the Saccos are still on the manual system. We need to first address this problem. This is basically what caused the delay,” Mr Kanimba said.

While the government earlier sought a strategic investor who would take up management of the financial institution and contribute 40 per cent of the Rwf5 billion capital required, Mr Kanimba said it would now start off as a microfinance bank, which would graduate to a full co-operative bank with time.

“The capital for a microfinance bank is Rwf1.5 billion,” explained Mr Kanimba.

“This is the money Saccos can mobilise among themselves. If we start as a microfinance bank, we shall only look for a manager who is not necessarily a shareholder, for we want to ensure that there is a strong management.”

Government largely blames financial malpractices that plagued most Saccos on their outmoded conduct of business that makes it not just difficult to control Saccos but also makes it easy for rogue managers to embezzle members’ contributions.

Majority of the Saccos were on several occasions put on the spot over bad loans, financial misappropriation and embezzlements of public contributions, among others.

Rwanda Today understands that it has increasingly become difficult to maximise oversight on the Saccos operations as the Central Bank doesn’t have enough staff to deploy for regular supervision of these institutions, neither does Rwanda Co-operative Agency.

The two institutions only conduct audits, where they are tipped off an alleged mismanagement.

According to Gilbert Habyarimana, who heads the Co-operative Inspection Division at the Rwanda Co-operative Agency, more than 41 of the 51 audited Saccos were found to have lost over Rwf120 million this year to financial malpractices.

Analysts argue that the proposed co-operative bank calls for stern reforms towards achieving the accounting and reporting frameworks of individual Saccos.

It is planned that all Saccos at sector levels will be merged into one at each district to own stakes in the co-operative bank on their behalf.

The financial institution’s core tasks would, as per the proposal, not only include treasury and liquidity management for all the Saccos in the country but also acting as a central financial institution, providing a wide range of financial services to its member institutions, among others.