FEATURED: Rwanda microfinance week 2018, a call for good governance

More than 300 professionals from around the country convened in one of the top events during the microfinance week which is a unique meeting point for microfinance professionals to discuss financial inclusion issues at various events spanning five days. The Rwanda microfinance week organized for the fourth time in the country by the Association of Microfinance Institutions of Rwanda (AMIR), under the support and partnership with Savings Banks Foundation for International Cooperation (SBFIC) was held from 19th to 23rd of November 2018. The week which kicked off on the Monday the 19th November started with AMIR members, together with their partners, SBFIC, travelling around the country to meet with all MFIs/SACCO managers and CEOs operating in 30 districts of Rwanda and concluded on 23rd November covering the last six districts that included Gakenke, Gicumbi, Bugesera and the 3 districts that make up Kigali. Launched in Musanze District Northern Province with the theme: Good corporate governance; a pillar to a strong Microfinance Sector, the event was a key industry occasion hosting high level and in-depth discussions by all sectors of the financial inclusion community, attracting leading experts and different micro finances. According to Nkuranga Aimable, the Executive Director of The Association Microfinance Institutions in Rwanda (AMIR), the week focused on finding resolutions that will improve the performance of the Microfinance sector, more specifically in the good governance of Microfinance Institutions. Good governance in Microfinance Institutions has proved over time to be an important factor in the success of the institutions, the services rendered and its development in general. “Establishing good governance in Micro finance Institutions is one of the main focuses of the week’s events. It is a principle we wish all those institutions to use.” Nkuranga said During the five day event, Jackson Kwikiriza the Senior Programs Manager at AMIR together with the Executive Director gave a background of the institution and also highlighted the status, plans of the institution and key figures on the microfinance sector. AMIR is the only umbrella body for microfinance institution that seeks to build a flourishing microfinance sector in Rwanda through different areas of Advocacy and information sharing, Research and Development, Responsible Finance, Performance Monitoring and Capacity Building. Though it started with 32 founding members in 2007, AMIR currently has 347 active members, serving poor and middle class families throughout the country. In 2015, AMIR admitted 134 new Imirenge SACCO Members and this brought the total number of AMIR Members to 243members. Since then, another 104 members have joined the association bringing the total number to the current 347. “We call everyone to join the association so that we have a one voice to be served under one roof-AMIR” says Kwikiriza. “This boom of AMIR membership is a result of appealing services provided by AMIR to members. Many microfinance institutions and Saccos are playing a big role in promoting practices that deepen financial inclusion, as well as improving service delivery. Three indicators were used to judge the institutions’ performance: product development, use of information and communication technology to foster financial inclusion, and client protection and social performance” explained Kwikiriza. Among the 347 are microfinance banks, Limited companies and credit and savings cooperatives. Its membership represents more than 90% of the microfinance sector in Rwanda with an aim of integrating all MFIs/SACCOs operating in Rwanda so that to serve them under one umbrella. AMIR membership is open to all Rwanda Microfinance Institutions/SACCOs that have been registered by the regulatory authority (the Central Bank of Rwanda). AMIR membership is also open to non MFIS /Saccos categories and also accepts non MFIs/Saccos plus associate members like NGOs that support the microfinance sector. After eleven years, AMIR has been excelling, transforming into an institution with a vision of becoming a strong organization that contributes to development of the microfinance industry through promotion of transparent management systems, innovative and market led financial services and products. The key figures on the microfinance sector since June 2015 indicate that consolidated profit after tax was 3.4 billion Frw and kept on rising to 4.3 in 2016 but later dropped drastically to -0.1 in 2017 because of various financial calamities and recuperated in 2018 to 3.3 billion Frw. Also figures indicate that the liquidity level of Microfinance institutions in Rwanda by June 2015 stood at 95.4 billion Frw and was stable through 2016 at 95.1 billion Frw and rose to 99.1 in 2017 reaching 103.3 billion in 2018. “The profitability of the SACCOs shows a good step towards their self-sustainability because they focus on delivering demand-driven products and services to the microfinance sector in Rwanda” says Kwikiriza. New code of Conduct The General Assembly of AMIR has adopted this Code of Conduct, to ensure that there are clear guidelines, self-imposed, to improve the quality of member microfinance institutions interactions with their clients and members, and regulate relations with other stakeholders. All our member MFIs, irrespective of their legal form, are committed to this Code of Conduct, which is essential towards achieving our mission, and promote highest standards of ethics and professional excellence, to provide financial and nonfinancial services that benefit clients and members, in a manner that is ethical and dignified, for the ultimate benefits of all fellow Rwandan citizens. The purpose of this Code of Conduct is to put in place a selfregulation mechanism for us, members of AMIR, in our relationship with consumers and other key stakeholders. It sets forth our ethical obligations; provides guidance on acceptable and non-acceptable behaviors and practices for our management as well as employees. According to the Executive Director of AMIR, by signing of this code, all members of AMIR, are committed to adhering to both the letter and spirit of the values and practices outlined in this code “This Code of Conduct clarifies for us, current and prospective AMIR members, and for those we serve, the nature of ethical and professional responsibilities we hold. By signing, it means that we as members shall always apply this code, no matter the legal structure of our MFI, to all types of microfinance activities, disseminate this Code of Conduct among our staff, clients and members, avoid any illegal or unethical practice and comply with existing laws and regulations related to the microfinance sector in Rwanda” said Nkuranga Good Corporate Governance AMIR strives to ensure that its never at fault with the laws and regulations related to microfinance, or other laws that are in force in Rwanda, including the new code of conduct. In particular, it commits to strictly comply with the rules and regulations issued by the regulator, and shall strive to keep informed about the regulator’s circulars as well as supervisory recommendations. “We shall observe high standards of governance, ensuring fairness, integrity and transparency by inducting persons with good and sound reputation and understanding of Microfinance as members of Board of Directors. As for transparency, we at AMIR shall provide our clients complete and accurate information and educate them about the terms of financial and non-financial products and services offered such as interest rates, commissions, fees, and all other charges; as well as about our policies and procedures in a manner that is understandable” said Nkuranga . Trainings organized by AMIR The Government of Rwanda and its development partners have been implementing various projects in the financial sector, all aiming at transforming Rwanda into a middle-income country and boosting its economic growth to become a “financial hub by the year 2020”. Microfinance practitioners and stakeholders, who help to lead this endeavor, work tirelessly to maintain the ideal pace of development through executing policies and strategies that the Government has put in place. So far, AMIR has conducted different training courses on client protection and a number of microfinance institutions have been assessed. AMIR and SEEP Network, with support from the Smart Campaign have been enhancing the capacity of the financial industry. One method is using smart assessors to assess Microfinance Institutions and provide technical assistance. In early 2017, a group of 25 sector actors attended the Smart Assessor Training and they were equipped with advanced knowledge and skills in assessing financial institutions and determining the application of the seven client protection principles. In June 2018, a second training was organized and attended by 26 participants. The trainees included managers of Microfinance Institutions, consultants and staff from AMIR. This smart assessment training is only the first step. the participants will still have to go through a series of practical assessments in order to be accredited and certified as smart assessors by Smart Campaign. Mandate AMIR brings together more than 340 microfinance institutions, including microfinance banks, microfinance limited companies, Umurenge SACCOs, and NGOs that are promoting microfinance. Our main responsibility is to support and facilitate the development of the microfinance sector in the country through advocating for them, facilitating them to access funds, trainings, and other support. Another mandate is to facilitate the development of the MF sector, exchanging information locally and internationally about the microfinance industry. “It is always better to share information about performance of your institution because you may think you are doing well yet you are not comparing your performance to any other finance institution. It helps to know how others are performing so you can strive to do better” says Nkuranga The other mandate that AMIR has is to promote best practices. For the growth of your financial institution, you need to identify and implement the best practices in your business to make it stand out from other businesses. “The major impact of sharing best practices in an institution is that it helps managers recognize existing knowledge gaps within the company. This, ultimately, leads to improvement in the productivity of an organization” says Nkuranga. Restructuring In October 2017, AMIR faced a management crisis and a new management to run the institution was elected in late February 2018 An assessment was done in May 2018 with AMIR main partner Savings Banks Foundation for International Cooperation (SBFIC) that identified gaps like insufficient coverage of operational costs, insufficient income streams, high reliance on donor funds and structural inefficiency. “Because of the funding gap consequences, we decided with the help our partners SBFIC to put cost control strategies by restructuring and reducing over indebtedness and also to refrain from spending of funds earmarked for other activities” explained Nkuranga New training products for the microfinance sector There are two training products, Saving Simulation for Adults and the Farmers Business Simlation that have been designed for families and farmers in Rwanda to help them learn about saving. Saving Simulation for Adults Savings Game is a highly interactive training for private households, young adults and small family-run business owners who want to manage a family budget successfully and to accumulate savings. The training of clients requires 2 trainers and takes 3 full days and the number of participants that attend the training should be not less than 16 and should not exceed 25 people. Those targeted for these training products include adult people above 16 years old (youth, women and men) perform some responsibilities at the household level. These include adult clients of the microfinances institutions and members of cooperatives in the country. Also Adult students in Secondary and High Institutions of learning that deserve Financial Literacy Education plus working class or staff members of some Institutions eg staff of MFIs, Government institutions According to Grathias Tusingwire the training specialist at SBFIC, the goal of the simulation is to reach the highest quality of life score and to achieve the family goal. “The idea of the Savings Game is to support participants to learn how to manage a household budget effectively and to accumulate savings by applying an experience-based approach that helps them understand the meaning of a household budget and learn how to manage it. The Farmers Business Simulation This is an illustrative and effective practical learning approach which enables farmers to easily understand how to do farming as a business and ways to improve farm profits. The simulation involves a special designed board, which graphically lays out the structure of a farming enterprise and the key decision points that a farmer takes in the course of operating a farming business enterprise. “The general objective of the board-based Farmers’ Business Simulation is to raise the knowledge and skills of small holder farmers, agricultural entrepreneurs and managers of financial institutions on the nature of farm business, organization and management by explaining basic unique nature of agricultural enterprises” says Tusingwire He added that the simulation assists farmers to define, manage and analyze financial statements in order to increase bankability and thereby secure future financing options. “The game enables trained farmers to make a reasoned planning of costs and investments and to understand more of financial institutions and how to work with them” says Tusingwire Reaction from Sacco Managers: Nyirigira Eric manager of ABANZUMUGAYO Sacco in Kayonza District on loans given to people in the 1st and 2nd category in the VUP program “We some times find challenges like when we give loans to people in the 1st and second category who are basically too poor with no securities. Ensuring that these poor and vulnerable people pay back the loans given to them is a problem. They in most cases tell us that they can,t afford paying back and that they used the money. The repercussions are that the number of non performing loans keeps on increasing Kabanda Innocent /Accountant Mwali Sacco in Kayonza District on the cost of the services that AMIR offers to Saccos. “I appreciate being a member of AMIR but i would like to know the costs of these services. There are costs attached to services like when AMIR helps us in recruiting staff for Saccos and also when we go to slove cases in corts of law. Murekiyisoni Emma from Vision Fund Rwanda in Gatsibo District on the new law “The new law today that suggests that we can take loan defaulters to the lower courts .This is good but still there is a big challenge because the law states that the lawyer should not be paid a single fee and that the cost that one incures through the process of the court case should not be charged on the defaulter” Ruganza R. Jules manager Sacco Gahengeri in Rwamagana District on the services that AMIR offers “Mine is just a clarification from the presentation where we have been told of the various services that AMIR offers. I would like to know if these services of recruitment and the advocay plus the trainnings are really offered by AMIR. We have been told that some of our collegues travelled to Canada and that many are to follow. Is this true and if so we look forward to these trips and trainings” SBFIC strong support Savings Banks Foundation for International Cooperation (SBFIC) is a German NGO. It is promoting the Micro-Finance Sector in Rwanda through capacity development, support of transparency in the Microfinance sector and the improvement of reporting systems as well as through lobbying and marketing of the sector. Financial education is another very important pillar of SBFIC’s program in Rwanda that involves not only investors, but also families to help them keep a balanced budget. AMIR, with the support of SBFIC, established a financial Education Program in Rwanda to encourage the Rwandan population to reflect about their future by shifting their habits to build financial capacity of target groups (students, parents, and teachers), educate people to distinguish between needs and desires, help people to fix financial plans and teach people to read savings plans. Until the end of the year 2017 more 80,000 more than 40.000 students opened savings accounts in Microfinance institutions and saved the amount of RWF 950 Millions. SBFIC was founded on behalf of the Savings Banks Financial Group in 1992. Since its establishment, over 150 projects in 60 countries were implemented. Today, there are 28 projects running in 25 countries including Rwanda, Tanzania and Burundi. The objective of its establishment is to develop the insightful experience from the German savings banks to related institutions in developing countries, thus strengthening local financial structures. In Rwanda, SBFIC’s mission is to augment the professional capacity of partnering institutions, empowering them to offer their customers a permanent access to financial services. The Microfinance week ended in Kigali on the 23rd of November 2018 at Champion Hotel where microfinance managers from over six districts convened Future Plans AMIR has plans to expand and improve its shared services in areas like IT, Audit, and loan recovery expanding and improving the the shared services eg shared IT, Audit, loan recovery and MFI staff recruitiment through Assessment center. “We shall endevor to recruit skilled and qualified personnel and as a must, we shall have a framework of procedures and management controls to ensure employee adherence to our code of conduct” says Nkuranga AMIR will put in place human resources and financial procedure manuals to regulate and guide staff recruitment, evaluation, salaries, retention, and dismissal so that both parties (employer and employee) are at the same level of understanding on the purposes and consequences of application of those procedures The institution will continue working together with its partners and with full government support through different Ministries (MINICOFIN, MINICOM, MINAGRI), Institutions like RCA, BNR).

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FEATURED: Rwanda microfinance week 2018, a call for good governance