PAC calls for effective recovery mechanisms of VUP-Umurenge loans

The Rwanda Local Development Support Fund (RLDSF) in collaboration with district authorities must ensure that loans disbursed through the Vision Umurenge Programme (VUP) are recovered, members of the parliament’s Public Accounts Committee (PAC) reiterated on Friday. VUP is an integrated local development programme established by government to accelerate poverty eradication, rural growth, and social protection.This, the lawmakers stressed, will facilitate the realisation of the country’s poverty reduction agenda as well as the sustainability of the programme.The PAC members were questioning RLDSF and VUP officials, over loan recovery concerns as highlighted in the Auditor General’s report for the year ending June 30, 2011.MPs said that while VUP has particularly had a positive impact on the welfare of the poor, there was need for more efforts.PAC Chairperson Juvenal Nkusi, told VUP officials that their primary interest was not only about the programme’s intended plans, but its failures too. The AG’s report cites a case in Nyamagabe district during the reporting year, where Kibilizi sector had given loans amounting to Rwf49m at an interest of two per cent to various loans beneficiaries. Repayments were to be made in instalments within a period not exceeding 12 months. However, the audit pointed out that as of March15, 2012 (nine months after June 30, 2011), only Rwf6m or 13 percent of the total loans had been recovered.In Ngoma district, three VUP sectors: Kazo, Gashanda and Zaza had disbursed loans amounting to Rwf287, 377, 500 to various beneficiaries. These loans were also to be repaid with an interest of two per cent, within a period not exceeding 12 months.However, the audit identified that until end February 2012, only Rwf 93, 049, 900 (32 percent of the total loan) had been recovered. The VUP director, Vincent Gahamanyi, admitted challenges in loan recovery efforts. Gahamanyi said: “We actually realised that there are loans that can’t really be repaid in one year. Another issue is that there are very many projects and, therefore, a monitoring problem.”He explained that beneficiaries largely involved in agricultural activities often delayed to settle up due to realistic circumstances. He said that they were offered an additional year to implement their projects and pay back.According to Gahamanyi, if beneficiaries are compelled to pay back in one year, they might end up folding up. adding that if that happens, the social protection objective would not be attained.“However, we made efforts to let the district authorities understand this issue such that they can assist us especially by starting from the village, cell and sector levels so that monitoring [of project implementation] can be bolstered.”Gahamanyi told PAC that the rate of recovery presently stood at 67 per cent.“Currently, cells, sectors and districts included recovery in their performance contracts and we have more hope things are improving,” Gahamanyi said. He admitted mistakes in previous loan disbursement processes that caused recovery risks saying that they have put in place an enhanced system to provide loans in phases. The VUP project consists of three components: financial services; public works; and direct support especially for the most vulnerable Rwandans.Only the loans disbursed under the financial services component, which has over 42,000 beneficiaries countrywide, must be recovered.The public works component has over 96, 000 beneficiaries while the direct support component caters for over 27,000 others. Even though funds injected in these two components are yet to be recovered, project coordinators must monitor activities to ensure that the goal of reducing poverty is attained.Meanwhile, during the session, MPs also highlighted issues of misappropriation of RLDSF funds.Among others, the AG report states that in October 2011, Rwf117, 337, 781 was transferred from RLDSF bank account to private bank accounts of companies allegedly owned by a former RLDSF accountant, Daniel Ruhirwa, who is reportedly on the run.Police and other relevant authorities are following up the cases.

National

PAC calls for effective recovery mechanisms of VUP-Umurenge loans