Government’s dream of addressing Rwandan teachers financial woes has come true. Teachers countrywide have formed the Umwalimu Savings and Credit Cooperative (SACCO) a facility for them to save and access loans to boost their small incomes.

"Umwalimu," SACCO, Kiswahili for "teacher,” SACCO operates with the vision of offering high quality, yet affordable, services to its members who get opportunities to obtain loans at low interest rates, strong office banking services, information concerning use of loans and best saving methods among others. 

It is not open to the general public. The Executive Chairman of the cooperative, Joseph Murekeraho recently revealed to the press that the SACCO is set to be officially launched on September 1, 2008.

Apparently, the cooperative has Frw1.7 billion in its treasury from teachers’ contributions including government aid. The scheme is a viable solution towards improving teachers’ lives through profitable loans.

"I can call it a magic solution. Teachers were earning meager salaries and it is not the salary that can enrich people,” Jose Habimana, the cooperative’s Director General added.

Primary teachers in public institutions earn between Frw20,000 to Frw62,000 per month depending on their experience while drivers in many government institutions earn between Frw100,000 to Frw150,000.

Just like other cooperatives, Umwalimu’s mission is to mobilize savings from members and grant loans for both productive and sensible reasons, which include starting small income generating projects, paying school fees for their children or even construction projects at competitive interest rates. More than 90 members have benefited from the Frw29.3 million that has been disbursed as credit.

"It was impossible for me to access any kind of loan from a big financial institution. They demand collateral which I actually don’t have. However, with our Umwalimu cooperative, I have managed to start up a small business which has met some of my basic needs despite my low wages,” explained David Nsengumukiza, a teacher in Nyamagabe.

The institution charges only  12 per cent interest annual rate on loans acquired by its members. This is the lowest compared to an 18 percent interest rate that is charged by other financial institutions. Monthly permanent savings also accumulate at 4 percent interest annually.

Damien Mugabo, chairman of the Cooperative Task Force, said empowering citizens economically through the cooperative movement is one of the strategies that the government has been using to fight poverty since 2005.

In 2006, the Ministry of Finance and Ministry of Education were therefore tasked to start the teachers’ cooperative. Having fulfilled the necessary requirements, the country’s Central Bank allowed it to operate starting February this year.

Today, statistics from the cooperative show that the cooperative’s membership has gone up to 82.9 percent of the country’s primary and secondary teachers and so far 33,000 out of 37,000 teachers in public schools have already joined the cooperative while 1000 out of 5000 teachers in private schools have joined as well.

An organization like this one will motivate teachers, especially as they access services that they could not receive before. Many are able to access loans now when it was previously more complicated because most financial institutions demanded collateral which many teachers did not have.

Umwalimu loan disbursement depends on a member’s accumulated savings.

Umwalimu’s board of directors is composed of teachers country wide from all the 30 districts with each district being represented by 30 members.

The President of the board is however is a cabinet appointee and takes his position permanently. Soon all salaries of teachers will go through the cooperative such that deductions on loans can be made before the recipients receive their salaries.

The number of members is growing and hopefully by 2009 all teachers will be members of Umwalimu SACCO. The organisation has four branches so far. Two are located in the Northern Province, one in the South with the main branch based in Kimironko.

The management is very optimistic that by 2010 more than 30 branches will have mushroomed in different parts of the country.

A 2005 study carried out by the cooperative task force on agricultural cooperatives alone showed that capital raised by people in each cooperative amounted to Frw128, 000.

Today, each cooperative is able to raise more than Frw550, 000 with more people becoming aware of the financial benefits that come with a cooperation strategy. Many own income generating projects while others market their produce.

Mugabo adds that through joining efforts it has also been easier for cooperative organizations to seek credit facilities from bigger financial institutions.

Mugabo stresses that cooperatives are not actually for the poor, however, poor people stand to benefit as a team.

"With a cooperative, one stands to acquire what they would otherwise not acquire on their own. Therefore if our cooperative movement is strong, then our economy is stronger,” he said.

Contact: keishaed@yahoo.com