Loans that attract 2 percent interest rate are now being disbursed to needy people, Justine Gatsinzi, Social Protection Division Manager at Local Administrative Entities Development Agency (LODA), has said.

Gatsinzi told The New Times that 8,868 projects of the needy citizens were given over Rwf1 billion in loans at 2 per cent interest rate.

The proposal came up at the 16th National Dialogue (Umushyikirano) in December 2018 during which it was resolved that everything must be done to ease lending conditions for the most economically disadvantaged Rwandans.

Overall, more than Rw11.2 billion worth of such loans is expected to be provided to the poorest people in this financial year, which will end June 30, 2020.

The resolution was taken after it was established that the needy were accessing loans at a prohibitive 11 per cent.

The 11 percent interest rate  was not only a challenge to the beneficiaries, but could also discourage them from requesting for the loans.

Gatsinzi was speaking to The New Times ahead of the 2019 Umushikirano, which starts Thursday.

During last year’s Umushyikirano, a resolution was adopted to review how funds meant to support the vulnerable, which were being managed by Umurenge Savings and Credit Cooperatives (SACCO), a situation that made these loans more costly.

The VUP financial services were being implemented under a partnership between Umurenge SACCOs and districts.

The review, Gatsinzi said, took into consideration the challenges that were hindering the absorption of loans by the needy.

"The challenges included high interest rate – which reduced from 11 percent to 2 percent [as a result of the review] – and lack of collateral which was a challenge to the poor,” he said indicating that the guarantee requirement was removed. 

This, he said, resulted into ceasing the partnership with SACCOs, leaving the scheme under full management and implementation by Local Government entities.

They are now managed through the office of the vice mayor in charge of Economic Affairs in collaboration with sector loan committees as central organs in the implementation.

Sector loan committees, he said, have been receiving and analysing loan applications.

Overall, he said that 94,359 projects from the needy have so far been received countrywide, of which 27,955 were examined, while 8,868 projects received loans.

He said that the loan committee assesses projects and provide advisory services to the people who seek the loans so as to ensure that their projects become profitable and successful. 

Moreover, he added that there are handouts that contain information about how to help people make projects and they are easy to understand for them.  

"That helps the loan committee at sector level, and other agents who work with people on daily basis as well as advise them, to ensure that a citizen ventures into an activity that will benefit them, be able to pay back the loan, and carry on such activity,” he said.

He pointed out that some of the projects are about trade, agriculture, and livestock.

These loans are accessed through Vision 2020 Umurenge Programme (VUP), which was introduced in 2008 with the aim to elevate economically vulnerable Rwandans from poverty.

Among the benefits of the programme, Rwandans under the first and second categories of Ubudehe – those made up with the poorest people.

Speaking during Umushyikirano last year, Prof. Anastase Shyaka, the Minister of Local Government, said that when VUP started, just over 50,000 needy Rwandans benefited from the funds every year.

In 2014 and 2015, he said, the number of needy Rwandans who benefited from the VUP funds increased to about 80,000.

However, he said that last year and the previous year, the programme was implemented in over 250 sectors and benefited 30,000 people because of increased interest rates.