Umurenge Credit and Savings Cooperatives (USACCOs) should establish strong operational mechanisms to address critical challenges affecting the micro-finance sector.

The remarks were made by Monique Nsanzabaganwa, the vice-governor of National Bank of Rwanda (BNR), on Thursday during a meeting of stakeholders to assess the operations of USACCOs in Huye District. The meeting focused on ways to address challenges affecting the development of micro finance institutions within the framework of financial inclusion.

Nsanzabaganwa cited poor management, non-performing loans and the theft of USACCO funds as some of the key issues affecting the performance of USACCOs.

The meeting attracted Umurenge SACCO managers, board of directors, district mayors and sector leaders in the Southern Province, members of Rwanda Cooperative Agency (RCA) and a delegation from BNR.

The meeting also chatted ways on how USACCOs can ensure better management of funds to ensure that the country’s financial inclusion targets are achieved.

During the meeting, it was revealed that Nkomane SACCO in Nyamagabe District, is struggling after losing Rwf126 million through embezzlement.

The scam was discovered after an audit of the SACCO in January.

"Now, Nkomane SACCO is struggling to operate normally and cannot pay its workers,” Jean de Dieu Sibomana, the president of the auditing council of Nkomane SACCO said.

Reacting to the issue of embezzlement of funds, the spokesperson of police in the Southern Province, CSP Hubert Gashagaza said some audit reports are not comprehensive and lack incriminating evidence to pin the suspects and this concern was echoed by BNR officials.

BNR said lack of good governance, including lack of good auditing, has resulted in the embezzlement of funds or money laundering, which is affecting the operations of USACCOs

"Some people in the USACCOs management do not understand their responsibilities. There are also USACCOs which are working without business plans for their development or growth vision. What should be focused on is a systematic monitoring and inspection of USACCOS. USACCOs should deliver better services, otherwise, the country’s financial inclusion targets would not be achieved,” Nsanzabaganwa said.

USACCO leaders at the meeting appealed for training opportunities to build their management capacity.

According to BNR financial report of June 30, 2015, the Southern Province had highest total assets worth Rwf23.6 billion, was the second in loan disbursement (Rwf6.7 billion), and the had the highest number of deposits (Rwf15.2 billion).

The province also has more people who opened accounts, at 587,354 and the lowest rate of nonperforming loans which stands at 6.7%.

The Southern Province has 101 USACCOS, representing 24.28 per cent of all the 416 USACCOS in the country.

The Government target for formal financial inclusion is 80 per cent by 2017 from current 42 per cent.

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