Victims of collapsed banks seek Ombudsman’s help

Disgruntled victims of Microfinance institutions (MFI) that collapsed are considering filing their concerns with the Ombudsman’s office, a reliable source has revealed. The source says that after trekking to Bank Populaire du Rwanda (BPR) every Friday in vain, the former depositors with the MFIs have said “enough is enough” and are now taking their cases to the Ombudsman. The government provided Frw3 billion to compensate the former MFIs depositors and assigned BPR to disburse the money. One of the victims Sunday Times managed to speak to said that BPR has not given them a satisfactory response to their queries. “I was given 50 percent of my deposit but they are not giving a vivid reasons for the delay in paying me,” Emmanuel Nshimirimana who was at the bank on Friday complained. “Thank God, I got that 50 percent. There are those still crying for the same to date. The problem is that they are not giving us a satisfactory answer. They are not telling us whether they will refund us or not. We keep going to the bank in vain,” said Nshimirimana a former member of Ongera Microfinance. He added that a number of victims of the closed MFIs have been referred to the Central Bank (BNR) but have also failed to get a positive answer. “I had a business that was growing. However, I am now back to almost zero; two of my children have dropped out of school,” Nshimirimana said with bitterness. However, Vincent Komanda, a BPR official in charge of MFI issues told Sunday Times that they have procedures to follow in order to refund the victims. Komanda said that proper screening is done to identify who deserves to be refunded especially those with available records. François Kanimba, the Governor of the Central Bank, said in a phone interview yesterday that the government is yet to refund the victims of the closed MFIs. He said it has set aside Rwf1.5bn that will cover 50 percent of the disgruntled depositors’ money, adding that the refund may commence in March after approval by the committee of ministers set up to solve the MFIs problem. Kanimba added the exercise of paying off the victims could have been completed earlier but it was delayed by many depositors who didn’t have proper records. In 2006, several MFI’s around the country closed down leaving thousands of Rwandans who had deposited billions of francs in ruin. According to Alphonse Hitiyaremye, the deputy Prosecutor General, last year investigations had unearthed that some managers used to write paper chits ordering accountants to give huge sums of money to their friends or relatives. Fifteen former MFIs managers were arrested for defrauding depositors’ after a year-long investigation after the government shut-down 8 bankrupt microfinance institutions in June 2006. This was followed by an operation that cracked down on several others increasing the number of the arrested MFIs defaulters to 50. The 8 local institutions shut down by the Central Bank had mismanaged funds and suffered huge losses as a result of poor credit management practices. The MFIs in question are Gasabo, Intambwe, Igisubizo, Ongera, Urumuri, Urugero, Gwiza, Ubumwe-Iwacu and Iwacu. A 2005 Rwandan microfinance sector assessment produced by Enterprising Solutions Global Consulting, LLC reports that the majority of the country’s microfinance institutions lack credit management skills and do not focus on avoiding delinquency. The assessment reports that many MFI’s were servicing more clients than they have resources for, unable to balance client growth with the growth in their institutional capacity. Ends