By the end of 2020, privately-owned Savings and Credit Cooperatives (SACCO) will be fully digitalised, owing to a new agreement with Access to Finance Rwanda (AFR).

Attempts to digitise operations in microfinance institutions were tried in the recent past, but majority failed mainly due to lack of resources.

Supported by Association of Microfinance Institutions in Rwanda (AMIR), 11 non-Umurenge SACCOs on Wednesday, October 7 signed a memorandum of understanding with AFR.

The MoU will see a core banking software deployed which will automate the SACCOs’ business operations and integrate digital transaction channels.

The technology will also cut short the process of reporting to the National Bank of Rwanda, the sector regulator.

This in return will curb losses and expenses the institutions previously incurred through using the traditional way of transacting business, using paper.

"We have been waiting for this moment impatiently,” said Faustine Ingabire, Manager of Zamuka SACCO based in Kicukiro District.

"We lose a good number of potential clients for not using digital technology because they think we are incapable to serve them well.”

She added that there are many operational costs that will be avoided by adopting technology, mentioning materials like stationary.

Non-digitized financial institutions also rely solely on physical interaction with clients and word-of-mouth marketing, limiting their growth prospects. Their financial data and customer information stored in papers are at risk in case of incidents such as fire or flooding.

Ingabire said the new system will, among other things, cut down expenses by introducing agency banking, allow clients to use mobile and internet banking.

In addition, financial and client data will be more secure stored at the National Data Centre.

"A smart system increases customer trust in microfinance institutions and hence attracts more clients,” she added.

Of the 438 SACCOs scattered across the country, 22 are privately managed.

These, in most cases, are the most vulnerable and too underfinanced to afford a topnotch technology, a reason that pushed AFR to step in.

Jean Bosco Iyacu, the Acting Country Director, AFR revealed plans to expand to all private SACCOs.

"We are starting with these 11 early birds, but we will soon expand to the rest because there is will and the system is capable enough to serve more institutions,” he said.

AFR purchased the Virmati technology and will pay service fees for the SACCOs for the first year.

In addition, SACCO leaders and staff will receive capacity building with focus on governance, risk management, credit administration and product development to propel growth.

"It has been clear to us that most financial cooperatives do not have a digital system, and one could wonder, during the Covid-19 lockdown for instance, how the clients accessed banking services,” Iyacu pondered, stressing that the technology will drive financial inclusion further by serving the unbanked.

AFR says that automation of SACCOs’ operations is relevant and urgent now more than ever especially during this period where the public is encouraged to use digital channels and avoid cash transactions to curb down the spread of the pandemic.

An estimated 50,000 underserved members and their families are expected to benefit from the technology, underscoring the partnership’s aim to bring about efficiencies in the provision of financial services to low income Rwandans and improve their incomes and livelihoods.

"This system is used by other big financial institutions here in Rwanda,” said Aimable Nkuranga, Executive Director of AMIR, adding that the technology is more secure. "We believe that it will serve people in a faster and efficient way.”

Financial inclusion in Rwanda has increased from 48 percent in 2008 to 93 in 2020, according to a FinScope Survey. The survey, however, points out that many of the SACCOs still operate manually and with minimum level of efficiency.

AFR is a Rwandan nonprofit organisation that seeks to increase access to and use of financial services by low income people, with a particular focus on women and underserved communities.