CECJ to start lending after one year of deposit taking, with its loans depending on the borrowers’ savings.
Rwanda’s judiciary has finalised a plan to establish a saving and credit scheme whose proponents say is intended to improve the socio-economic status of judges and other court personnel.
The cooperative, which will be known as CECJ — a French acronym standing for “saving and credit association of court personnel” — is expected to ease access to finance by workers in the judiciary many of whom don’t have the bankable collateral that lenders often demand before extending credit.
“We came up with this scheme in the spirit of solving our financial needs especially accessing loans at a reasonable interest rate, which will of course help in improving our economic welfare,” said Supreme Court justice Ngagi Munyamfura Alphonse, who is the current president of the scheme.
The scheme is also expected to bring relief to judicial personnel given the nature of their profession, which subjects them to stringent ethical rules that prevent them from, among other things, engaging in commercial activities.
A judge in the lower court earns Rwf379,000, Rwf50,000 less the salary of a prosecutor of the same rank.
Judges, court registrars, inspectors of courts as well as staff appointed in the Office of the President of the Supreme Court and in the General Secretariat of the Supreme Court will be eligible to join CECJ.
Rules and regulations
A general assembly held on February 17, adopted the rules and regulations of the scheme, giving it the go-ahead to start taking deposits.
“In the meeting we pledged our savings, which will be deducted from our salaries starting next month” said a judge who asked for anonymity.
The rules and regulations of the scheme provide that every member should regularly pay at least four per cent of their net monthly salary in contributions, which will then constitute the basis for loans given.
It is envisaged that CECJ will start lending after one year of deposit taking, with its loans depending on the borrowers’ savings.
The general assembly determined that a member could borrow any amount that does not exceed three times the value of their savings.
“Reimbursement will be done according to the provisions of the loan contract. However, no loan reimbursement should exceed five years,” the regulations read.
The rate of interest in the scheme is yet to be determined, but initial talks suggest that it will be around six per cent per annum. The current lending interest rate in Rwanda varies between 16 and 18 per cent in commercial banks while it goes down to 14 per cent in microfinance institutions.
Rwanda has successfully implemented savings and credit schemes for professionals such as Zigama Credit and Savings Society — a financial co-operative exclusively for state security personnel and Umwalimu Savings and Credit Co-operative for teachers, which has been operational since 2006.
Co-operatives operate based only on the contributions made by their members and require no legal status or license from the Central Bank to perform their activities.
However, CECJ can receive gifts and legacies, paving the way for government support as it did with the teachers’ scheme.
The idea to institute a saccos for judicial personnel received support from President Paul Kagame when he opened the 2015 judicial year in Gabiro.
According to members who attended the general assembly, it is projected that by March the scheme will have more than Rwf10 million in savings and more than Rwf100 million by the end of the year.