For many farmers, dream to get pension once they get too old to carry out farming activities, or suffer from permanent disabilities due to accidents or diseases, seems impossible.  This is the case because agriculture has been viewed largely as an informal sector, whereby farmers do not have fixed income.

Indeed, farmers get money when they have harvested their crops on seasonal basis, which occurs more often after six months or quarterly, mostly depending on the type of crop grown.

However, crop diseases, unpredictable extreme weather patterns such as drought and floods, shatter their yield hope, making them unable to contribute to pension scheme for social security purposes as the scheme’s success depends on constant and sustainable contributions by its subscribers or members.

Realising that its workers and members were crossing border in search for maize flour for food, the cooperative set up a maize mill with capacity to produce 12 tonnes of flour per day currently (courtesy)

For COOPTHE Mulindi, a cooperative of tea farmers in Gicumbi District, uncertainty in the farming sector should not exclude farmers from social security benefits such as pension.

Created by 807 members in 1968, with each member contributing Rwf1,000, considered as a share, the cooperative saw the share per member increase from Rwf1,000 at its inception to about Rwf4 million in 2018. Currently, it has 1,000 members.

The assets of the cooperative was estimated to Rwf807,000 in 1968, and rose to Rwf96.9 million in 2000, while it further increased to over Rwf3.9 billion in 2018, as its statistics indicate.

Leonidas Munyaneza, the cooperative manager told The New Times that as of 2018, its tea plantations occupied over 619 hectares, and harvested 5.198 million kilogrammes (over 5,198 tonnes) in that year, generating over Rw1 billion in revenues. He said that it is improving lives of people in the area of its operations, indicating that in 2018, it spent about Rwf537 million in wages to some 1,200 workers who carry out various farming activities such as weeding and tea leaves plucking.

Those workers include members of the cooperative who have interest in such activities.

All the workers for the cooperative get paid contributions in the pension scheme managed by Rwanda Social Security Board.

The pension scheme stipulates that contribution rates are six percent of the employee’s pay of which 3 percent is made by the employer and 3 percent by the employee.

A partial view of the equipment used in the production of maize flour at COOPTHE Mulindi's maize mill. (courtesy)

Apart from income generated from sale of their tea produce, farmers receive dividends from the proceeds it has made by the cooperative.

In the last five years starting from 2014, Munyaneza said, all the 1,000 members got Rwf1.29 billion dividends, which is Rwf1.29 million per member. The disbursements continued an upward trend as they rose from Rwf102 million, or Rwf102,000 each in 2014, to Rwf492 million or Rwf492,000 each in 2018.

This means that, a member got Rwf41,000 per month.

Last year, Munyaneza said, the cooperative contributed Rwf10.2 million for its members and workers in the pension fund.

"Some members of our members are no longer able to work. So, getting pension helps them meet their necessities such as food for them not to go hungry, be able to pay for healthcare, and buy clothes. It is a means to take care of them during the old age when they are unable to work,” he said.

Insurance

Each of the 1,000 is paid health insurance for four members of their family, meaning that the cooperative covers health insurance for 4,000 people, Munyaneza said.

In addition, he said, they have their life insurance coverage whereby in case of death of a member, their family receives Rwf600,000 indemnity.

A savings and credit cooperative for farmers

The cooperative set up COOPEC Ishema – a savings and credit cooperative – around 2004, which had over Rwf60 million funds as of December 2018. Through it serves the members of the cooperative, the facility works independently from its management.

"A member can get Rwf200,000 credit without giving an collateral, rather request approval by the cooperative. It’s like an advance salary loan,” he said adding that such money can be increased to Rwf500,000 if need be, and it is received within two days of request.

For loan that requires some guarantee, the ceiling was so far Rwf2 million.

Venturing into maize flour processing

In 2015, the cooperative thought of producing flour from maize, and in December 2017, it set up Inono Maize Flour mill with capacity to process 12 tonnes per day, which started operations last year. It sources maize from local farmers.

The aim, Munyaneza said, was to help its workers and members get maize meal which they would otherwise go to look for from neighbouring country – Uganda.

"We made an arrangement by which they get flour on credit and pay for it by the end of a month,” he said.

He said that with about Rwf60 million investment in the mill so far, it registered over Rwf6.9 million returns in the first year of its operations.

With the demand for flour in sectors near the Rwanda-Uganda border, Munyaneza said, the maize flour business makes more economic sense.

"We are obliged to make more investment in this business to serve people in this entire area. It has now become another business opportunity. We are no longer looking at it in the context of serving our members alone, rather the entire population in the area,” he said.

For the cooperative to further improve its performance, the Rwanda Cooperative Agency (RCA), a public institution in charge of promoting cooperative sector, supports it through capacity building programs, inspections, audits, trainings and coaching.