Micro Finance Institutions (MFI) should come up with ways of educating their clients on how to properly use loans, the Director of Micro Finance Development and Financing Fund (FOREDEM) in the Rwanda Development Bank, Prosper Nyirumuringa, has said.

He said this on Tuesday at a Corporate Conference on Poverty Alleviation through Micro-lending that was held at hotel Novotel Kigali.

While making his presentation on BRD’s role in microfinance development, Nyirumuringa said that for these institutions to perform better, loan officers should go out into the field to supervise their clients on how to run their projects.

"Every single institution has loan officers but they should refrain from sitting back in their offices. They should be able to make follow ups on clients and help where necessary through advising and educating them on proper use of funds,” Nyirumuringa said.

He also pointed to the lack of seriousness and over trusting of MFI staff and board directors as having caused a big blow to the financial institution.

"There is a tendency of the staff over trusting and lending money to clients of different status like pastors and officials from local authorities who later fail to pay back. This has affected the finance institutions but fortunately, the system today no longer allows it,” Nyirumuringa added.

Participants in the conference were of the view that most individuals and businesses in Rwanda face difficulties in obtaining loans from banks and financial institutions.

Among the solutions to this was to encourage Micro Finance Institutions to take up micro leasing as an alternative financing mechanism.

International Finance Corporation (IFC) operations analyst, Atete Rugege Karimba said leasing is one way of easing borrowing and ensuring that the funds are properly used.

"Our key interest is to promote leasing in Rwanda because it is an alternative way of accessing finance for businesses. Also there is assurance that the money will be put to proper use because leasing is about acquiring equipment in exchange of specific periodical payments,” Karimba explained.

The one-day conference that brought together participants from Micro Finance Institutions and their clients was orgarnised by Real Marketing, Rwanda Development Bank (BRD) and the International Finance Corporation.

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