Fifteen people have been arrested by the Office of the Prosecutor General in connection with causing losses to Micro Finance Institutions (MFIs). Their illegal acts are largely responsible for insolvency cases which led to a series of closures of MFIs in 2006. The apprehended are former managers or owners of the financial institutions, though some imprudent or irresponsible borrowers will also be pursued. Government has since intervened to minimise depositors’ losses by paying them half of their total deposits at closure time. The Prosecutor General promised the balance shall be recovered from the owners, managers and ‘illegal’ borrowers.
Fifteen people have been arrested by the Office of the Prosecutor General in connection with causing losses to Micro Finance Institutions (MFIs). Their illegal acts are largely responsible for insolvency cases which led to a series of closures of MFIs in 2006. The apprehended are former managers or owners of the financial institutions, though some imprudent or irresponsible borrowers will also be pursued. Government has since intervened to minimise depositors’ losses by paying them half of their total deposits at closure time. The Prosecutor General promised the balance shall be recovered from the owners, managers and ‘illegal’ borrowers.
Mismanagement of any institution is unfortunate. Mismanaging a bank or any financial institution is criminal. It is even more sinful considering that what is at stake in this particular case of MFIs are savings from the poorest of the poor.
The moral imperative is not the only factor in the apprehension of the fraudulent bankers. Such behaviour can be a huge economic hindrance too. Professional dishonesty in banking discourages saving. Yet this is a young culture currently being nurtured with the aim of having it as the cornerstone of domestic investment potential in future.
Under guidance from government, Rwandans have seriously begun taking advantage of the prevalent peace and stability. For example residents of Zinga Cell in Munyaga Sector of Kayonza in the Eastern Province have effectively tackled the Mutuelle de Sante issue by saving Frw50 every week through an association. It is one of their Cell Innovation projects, an initiative they have originated.
Zinga Micro Credit Finance is where they opened their account. With the innovation, they have managed to remit the annual health insurance premium for 2008 and are already saving for next year.
Besides putting in place a conducive atmosphere, formulation of protective policies favouring especially small savers such those of Zinga Cell is a duty policy makers should give serious attention. It is the reason the arrests of former MFIs managers is a welcome development.
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