Umwalimu Sacco members at a loss as lending is suspended

Sunday November 5 2017

Umwalimu Sacco headquarters in Remera, Rwanda.

Umwalimu Sacco headquarters in Remera, Rwanda. PHOTO COURTESY 

By LEONCE MUVUNYI
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The management of Umwalimu Sacco — the teachers’ Savings and Credit Co-operative — has denied reports that the scheme is facing a funding crisis after it stopped accepting new loan applications.

The move left over 1,200 members stranded last week when the sacco’s management said it would not be accepting new applications for loans until the end of the year.

The decision, which came amid a backlog of loan applications, was communicated to members in a memo dated October 17, which said the sacco would not accept new applications from October 24 until December.

Umwalimu Sacco’s management claims it is overwhelmed by the huge number of unprocessed loan applications inherited from the old management, who did not process them in time.

However, Laurence Uwambaje, the Sacco’s managing director told Rwanda Today that applications for small amounts of money and salary advances would not be affected by the suspension. She denied that the sacco was facing a funding crisis.

“Emergency loans and salary advances will still be processed during this period. We want to focus on processing loan applications received so far. After that phase, new loan applications will be accepted,” she added.

Before announcing the freeze on lending, Umwalimu had more than 1,200 pending applications.

The move is likely to affect about 73,000 members of the co-operative who say it has always been a hassle accessing loans from the sacco.

“It was difficult to get an ordinary loan from Umwalimu Sacco without offering staff members incentives. The suspension is going to affect many of us negatively but we have hope in the new management,” said Alfa Dushime, a tutor in Eastern province.

Besides the thousands of unprocessed loan applications, the co-operative has non-performing loans amounting to Rwf2 billion ($2.3m).

Corruption

Ms Uwambaje who took over management of Umwalimu last December, blamed some of the losses on collusion between officials at branch offices who approved loans without following the set protocol.

A recent report by the Ombudsman blamed cases of corruption in the Sacco’s loan appraisal process, which made it difficult to recover some loans.

The report showed cases of fraud, embezzlement and corruption, which saw members’ contributions irregularly loaned out.

In some instances, loans were given out without collateral or without a written contract between the co-operative and borrowers.

Such loans amounted to Rwf135 million ($158,052) and about Rwf35 million ($40,976) of this was loaned out to individuals who are not members of the co-operative.

About Rwf100 million ($117,076) was loaned out to a single person and this was in violation of Rwf70 million ($81,953), which is the amount set for borrowing by a single member.

Ms Uwambaje declined to discuss the Ombudsman’s report, arguing that most of the reported cases were before she took office.

She said investigations were under way and culprits would be prosecuted once enough evidence has been gathered.

She said the decision to suspend lending right now was a follow-up on resolutions made in the previous general assembly, which reasoned that the loans the co-operative gives out during the festive season tended to be more difficult to recover because some teachers change schools at the end of the year or move abroad for further studies.