Before the Umwalimu Sacco came to the rescue of Marie Paul Mukabarinda, she was struggling just like any other school teacher and expecting nothing more than peanuts at the end of each month. "It was hardly possible for me to get a loan from any bank because my salary could not provide enough collateral,” Mukabarinda recalls. 

When she joined Umwalimu Sacco, her life ceased to depend on a shoestring budget. With the support of the Sacco, she is now a proud owner of a petrol station and a guest house, both located in Gisagara district, southern province. She has also managed to build her dream home.

Umwalimu Sacco is a savings and credit cooperative that empowers teachers to transform their socio-economic welfare

Just like Mukabarinda, Edward Mshimiyimana, a teacher at Groupe Scolaire G.S Butamwa in Nyarugenge district was finding it hard to keep his head above the water. The first time he got a loan from Umwalimu Sacco was in 2010. Since he had neither a guarantor nor collateral security, his only option was to get a salary based business loan of Rwf.900,000. He managed to buy land using that loan and set up a piggery farm from which he earns an estimate of Rwf. 200,000 every month. 

Mshimiyimana acquired another business loan of Rwf.4 million this year, using the land he acquired in 2010 as collateral to expand his farming business. He also has two Friesian cows from which he gets at least 20 litres of milk every day. 

The other person who is exhilarated about a part of this enviable initiative is Priscille Mukaruzima. Her primary income from teaching English and Maths to pupils at Kamashansh Primary School in Kicuciro is supplemented by a poultry farm that she set up using a loan of Rwf.150,000. 

"My life has changed. I can afford to provide good education to my two children and I also don’t have to buy food anymore,” Mukaruzima says. She has also managed to renovate her house and acquire a piece of land for tilling. Asked whether she plans to leave the teaching profession to concentrate on her growing poultry business, Mukaruzima says, "I love teaching. I am going to continue to teach and then hire people to assist me with the work in the poultry farm.” 

These are just a few of thousands of testimonies from teachers whose lives have taken a complete turn after joining Umwalimu Sacco.

How Sacco was formed

The teachers’ salaries are inadequate. In comparison to their selfless service in passing on knowledge that is vital for the present and future generations. Teachers’ remuneration has always been meager. The government of Rwanda was fully aware of this problem and recognised the need to uplift their socio-economic status but increasing their salaries would translate into significant budgetary increase that the country would eventually fail to sustain. 

The inability to provide sufficient financial incentives called for the need for combined efforts to address the plight of teachers. So then, the idea to form a Savings and Credit Cooperative (SACCO) for teachers was born.

After being initiated by President Paul Kagame in 2006, within two years the Sacco had saved Rwf.1.4bn. The Umwalimu SACCO became fully operational on 22nd February, 2008 after being accepted by the Ministry of Commerce and Industry and Tourism as a cooperative and receiving a license to operate by the Central Bank.

Membership, eligibility for loans

"At the beginning, the Umwalimu Sacco was composed of at least 20,000 members but today, the Sacco boasts of 70,000 members from all the parts of the country and there is a steady increase in membership,” reports Joseph Mugire, the head of marketing and product development, Umwalimu Sacco.

Of the 70,000 members, 90% are primary school teachers, 9% secondary school teachers while Ministry of Education staff form 1% of the total membership subscription. 

To become a member of the Sacco, one pays share capital of Rwf.10,000 and Rwf.1,000 as membership fee. Thereafter, one is expected to contribute 5% of one’s net monthly salary. For purposes of efficiency, the contribution is deducted from a member’s salary using the check-off system, the employer having the responsibility of ensuring that the money is received by the Sacco. It is later redistributed to the respective accounts. As soon as they register, every person is entitled to interest, dividends and at times bonus at the end of the operational year of business, whenever there is profit.

However, like in any other Sacco, qualifying for a loan occurs after six months of membership and saving. The amount borrowed is up to 5 times of a member’s savings. 

From a modest beginning, Umwalimu Sacco has grown to enable it to raise its loan ceiling from rwf3million payable in 2 years to Rwf15million payable in 5 years. With a current net worth of Rwf. 30.94 billion, access to loans is a quick and easy process. 

There are three types of loans availed to Sacco members. The most popular are consumption loans which are meant to cater for emergencies like hospital bills and school fees among other expenditures. Loans of this kind require no collateral as they are usually small sums of money, payable in a short period of time, maximum of two years. However, business loans and mortgage loans require collateral as they require slightly bigger chunks of money and they are payable after a maximum of 6 years and 15 years respectively.

Membership is for life 

Should someone decide to terminate their membership, he/she will get accumulated capital share and savings less the money owed to the cooperative and shared losses. 

"Members of the Sacco who have retired from service are considered for increased interest on their savings and a slight increase in their remuneration at the end of every year,” says Mugire.

What makes Umwalimu SACCO tick

The Sacco has thirty branches which are operational in every district in Rwanda. Members can access services with ease, anywhere they please because the services are online based, requiring only presentation of a fingerprint instead of a bulk of paperwork. 

What makes it even simpler is the fact that there is a partnership with three hundred sector Saccos which provides for quick money transfers; members of Umwalimu Sacco can deposit, withdraw and even get an overdraft without necessarily having to go to any Umwalimu Sacco branch. 

What sets Umwalimu Sacco apart is that compared to other financial institutions, the lending rates are impressively low, ranging from 11%-14% per annum depending on the type of loan.

So far, teachers have received an accumulative loan amounting to Rwf 65 billion, the biggest amount being used in constructing decent residential homes and setting up small businesses.

In addition to saving 5% of the net monthly salary or a minimum of Rwf.2000, a funeral solidarity fund was set up. This is a voluntary initiative through which members of the Sacco contribute Rwf.300 per month to provide financial support whenever one of them loses a member of his/her family; Rwf. 200,000 in case of loss of a child and Rwf.300,000 in event of loss of a spouse.

As of 15th April, 2014, over eight hundred members had benefited from this fund. The amount that was spent equaled to approximately Rwf. 217 million, leaving a reserve of Rwf. 457 million. "Not only does the funeral solidarity fund give financial support to the bereaved, it boosts the Sacco’s liquidity as well,” says Mugire.

But more than just providing financial assistance, Umwalimu Sacco provides advisory services to its members and so far, 2,148 members have been trained in entrepreneurship skills and project development. 

Setbacks

Perhaps, the most common set back faced by the Umwalimu Sacco thus far is when one of their members changes professions, having been sacked or having decided to leave the teaching profession.  However, there is a network of representatives at the grass root level and a recovery team which make it easy to recover the loans. Also, the fact that there is a credit Reference Bureau where detailed data pertaining loans that have been dispensed in a particular year is stored makes it impossible for anyone to default on a loan because it will be impossible for him/her to access a loan from any other financial institutions.

The other challenge is that although 70,000 is an impressive number, the capacity of the Sacco isn’t big enough to cater for all the teachers in need of loans. Nshimiyimana appeals to the government to provide more financial support to the Sacco to overcome this challenge.

There is also a tendency of teachers opting out of teaching career when they gain a higher economic status, which is definitely not in line with the Sacco’s sole purpose for existence. However, Jean Desire Usabyimana, the Umwalimu Sacco credit director, is confident that upon setting up businesses, teachers create employment opportunities for the youth. So then, this is a minor setback or even more of a blessing in disguise.

Although the Sacco exists to uplift the economic situation of teachers, most of them are in a hurry to set up decent shelters for their families as opposed to starting up small businesses. "The demand for consumer loans is high,” Usabyimana notes. "We would like to see an increase in requests for productive/business loans,” he adds. 

Usabyimana therefore encourages teachers to start small, perhaps with agricultural and livestock businesses as they have a sure market and the income they obtain from these ventures can help them set up the residential structures of their dreams.

The future of Umwalimu Sacco

"Our main aim isn’t to make profits. This Sacco solely exists to uplift the socio-economic welfare of teachers in this country.” Mugire explains. The emphasis has, and will continue to be helping teachers to start incoming generating activities to provide supplementary revenue to their monthly salary.

Thus, there is a plan to acquire a bigger working space to improve the services given to the members while mobilising more funds for the loan project.

So far so good and there is no doubt that the future of Umwalimu Sacco is bright. But already, many lives have been changed all thanks to Umwalimu Sacco.

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TEACHERS' VIEWS ON SACCO

Innocent Niyonsaba, Remera Protestant School I have been a member of the SACCO since 2009. The SACCO gives us credit which we could not possibly save by our selves. However, I wish the 5% deducted from our salary is reduced slightly. 

Speciose Nyirawimani, Ecole Primarie de Kibagabaga I have spent more than five years in the Umwalimu SACCO and the achievements are enormous. I have invested in agriculture and businesses thanks to their cheap loans. Before getting a loan from the SACCO, we are advised on how to best to invest it. Their advances are also very timely. 

Levi Ndihokubwayo, Remera Protestant School When I started teaching one year ago, I immediately joined the SACCO because I want to invest in many projects. The only problem I have found with the SACCO is the delays in processing the advances.

Vicent Sewinkwavu, school supervisorI have an account with the SACCO. My only problem with it is that it gives us insufficient funds to carry out any major investment. I wish they could give us more credit so that we invest in bigger projects.

Theophile Uwiseyimana, Ecole Primarie de Kibagabaga I joined the SACCO two years ago and I have benefited quite a lot. I borrowed some money from the SACCO which I used to start on the foundation of my house and boost my agriculture activities. I have also been able to start a farm. 

Jeannine Nirere, Remera Protestant School I borrowed Rwf 200,000 from the SACCO which I used to pay a relative’s school fees which indicates that the SACCO is beneficial. I wish it would allow teachers in private schools to also join.