Blame game threatens to fell giant Umwalimu sacco

Saturday January 11 2014

By Rodrigue Rwirahira and Andrew Israel Kazibwe Rwanda Today

A blame game between teacher loan seekers and creditors might go on longer unless a settlement is reached over the amount of money to be loaned.

Teachers have faulted Umwalimu Savings and Credit Co-operative (sacco) for meagre finances with shorter periods of reimbursement while creditors blame teachers as designing poor projects that cannot earn them sufficient loans.

According to teachers, it takes a long time to process loan files, at least in some parts of the country, with many ending in the bin for failure to meet the required standard for project financing.

“They have installed a culture of having people apply for a loan in a group in the name of getting a big amount of money, while when applying as an individual your file is either delayed or financed poorly,” Ezechiel Tuyishimire, a teacher in Kicukiro District, complained.

Mr Tuyishimire added that individual borrowers are lent 80 per cent of the amount they applied for, depending on the available and presented collaterals and the wage value, while those seeking a group loan can be given up to Rwf100 million with a salary consideration.

“Those who have failed to reimburse losses decide to flee the country or abandon their properties if they were not keen enough to sell them before they escaped,” said Chantal Bagenzi, another primary school teacher in Gasabo District.

In response to the complaints, Robert Asiimwe, Umwalimu’s head of business development services, stated that processing of loans depends on the type applied for.

“If it’s a long-term loan where guarantees are required, the bank has to make sure all procedures are in place and wide consultations have to be undertaken before processing the loan,” Mr Asiimwe said.

He added that, as with any other financial institution, the sacco ensures maximum capacity of a member applying for a loan for possible repayment in due time.

“They are urged to design more satisfying projects in which to invest and advised to team up in groups so as to get more viable loans,” he added.

According to the official, the sacco has hired business development companies (BDCs) to conduct training of trainers courses at the sector level since the beginning of this year.

It is expected that after the training each member will have mastered entrepreneurship, business plan writing and management of small and medium enterprises.

The teachers’ sacco, which gives a variety of loans, had previously reduced its lending rate by three per cent in a move aimed at enabling more members to access loans.

Reduced interest on loans

It reduced the interest rate on loans from 14 per cent to 11 per cent to help teachers who get their salary from the government budget.

The sacco of 60,000 active members last year but one received a boost from the government’s budget line of more $8 million (Rwf5 billion) to add to its normal lending capital estimated at $64 million (Rwf40 billion) per year.

With the increasing demand for loans, the giant sacco has also introduced facilities meant to help teachers to access mortgages with a 15-year guarantee of reimbursement instead of five.