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Rwanda Cooperative Agency: What the recapitalization of SACCOs means
Umurenge Savings and Credit Cooperatives in Rwanda, which have a history of loss making, are currently undergoing a process in which more than 40 of them will be consolidated and recapitalized. The Director General of Rwanda Cooperative Agency, Jean Bosco Harelimana spoke to CNBC Africa for what it means.
Thu, 19 Aug 2021 10:06:28 GMT
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AI Generated Summary
- Recapitalization and consolidation of SACOs aim to address financial losses, mismanagement, and non-performing loans in the sector.
- Enhanced accountability measures and cooperation with law enforcement agencies are pivotal in restoring public trust and safeguarding depositor savings.
- Automation and consolidation efforts spearheaded by the Rwanda Cooperative Agency seek to create a sustainable and client-focused cooperative banking system in the country.
The Umurenge Savings and Credit Cooperatives (SACOs) in Rwanda, which have a troubled history of financial losses, are currently undergoing a transformative process. More than 40 SACOs are set to be consolidated and recapitalized to enhance their financial stability and effectiveness. In an exclusive interview with CNBC Africa, Jean Bosco Harelimana, the Director General of Rwanda Cooperative Agency, delved into the significant implications of this move for the financial sector of the country. The SACO program was established with the dual aim of combating poverty and fostering financial inclusion. With 116 SACOs in operation across Rwanda, the program has been pivotal in empowering local communities and promoting financial literacy. However, since 2019, issues such as mismanagement, malpractices, and non-performing loans have plagued some SACOs, eroding public trust and jeopardizing the savings of depositors. In response, the government has initiated a recapitalization drive to restore confidence in the sector and ensure the protection of savings. Harelimana emphasized the importance of accountability and cooperation with law enforcement agencies to hold accountable those responsible for financial mismanagement within SACOs. The Central Bank's data revealed that over 50 SACOs reported losses amounting to 686 million Rwandan francs, primarily attributed to poor business practices and challenges in loan recovery exacerbated by the COVID-19 pandemic. To address these issues, the Rwanda Cooperative Agency is spearheading a comprehensive restructuring plan that involves consolidating SACOs and enhancing their operational efficiency. By consolidating umbrella SACOs at the district level, the agency aims to create robust financial institutions capable of sustainable growth and effective management of funds. The ongoing automation of SACOs is a crucial step towards achieving this goal, with a focus on enhancing transparency, accountability, and professionalism in the sector. The government's commitment to financing this initiative underscores its dedication to promoting a resilient and client-oriented financial system within Rwanda. The ambitious timeline set for the automation and consolidation process reflects the agency's determination to streamline operations and establish a cooperative banking framework by bringing together all SACOs under a unified structure.
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