I.2 BACKGROUND OF MICROFINANCE IN RWANDA.
Micro-finance is an important part of the financial sector in
Rwanda, led by the Union des Banques Populaires du Rwanda, a network of
micro-finance institutions that served as micro-lenders and micro-banks for
nearly two-thirds of all depositors in the country. This institution controlled
over 97% of the micro-finance sector in Rwanda. (Rwanda Microfinance Sector
Assessment 2005)
The microfinance sector in Rwanda has been dominated by the
network of Banques Populaires especially in terms of a number of recipients of
the financial services and volume of activities.
In 1972 Switzerland agreed to help Rwanda duplicate the Caisses
Raiffeisen model in
Rwanda with a double social objective for Banque Populaire:
1. To offer reliable and affordable deposit products,
2. To stimulate the creation of Small and Medium Enterprises
(SMEs) by democratizing credit. (Steven 2004)
The first Banques Populaires was inaugurated in Rwanda at NKAMBA
in 1975. Their
Federation, the Union of the Banques Populaires (UBPR) was
inaugurated in 1986.
In 1994 before the war and the genocide in Rwanda, UBPR had more
than 130 affiliated
Banques Populaires servicing 366.799 members throughout the
country. During the war 1990 - 1994
approximately 7 millions$ was stolen and the institution
closed.
UBPR reopened gradually after the war and in 1996 the system
comprised of 42.000 members
and only 20% of its old staff. Between 1996 and the 1998
operations of credit were stopped
because of the important level of nonperforming loans. The
distribution of credit started again
in 1998 and at the end of 2002 UBPR counted 315.356 members and
148 Banques Populaires.
The 27th General meeting of the UPBR of April 21, 2007 decided to
transform this very important coopec (Cooperative d'épargne de credit )
into commercial bank which would keep the cooperative principles of governance
while offering a range of varied financial services to its members. This was in
line with the recommendations of the Financial Sector Development Program
adopted by the Government. Beginning of the year 2008, these Banques Populaires
and their Central Caisse were transformed into a commercial bank, called Banque
Populaire du Rwanda SA (BPR SA) (WOCCU report 2002).
The Banques Populaires transferred all their assets to UBPR after
their evaluation. The capital of UBPR was increased by the value of these
assets. Thus the revalued capital increased by 35% which were bought by
Rabobank the strategic partner (Rabobank gives the technical assistance
necessary to transform BPR into a true commercial bank). The shareholders of BP
became shareholders of BPR SA. UBPR modified its network by transforming the 18
principal Banques Populaires into branches of BPR and other BP in sub branches.
BP has a structure of a cooperative banking license with commercial objectives
while maintaining its cooperative characteristics and by preserving the
shareholders role and its bond with the local communities.(www.bpr.rw)
The Government of Rwanda is aware that poverty reduction can
not be achieved without access to financial services to the poor. As a result,
microfinance is considered a powerful tool to reduce poverty and the current
Poverty Reduction Strategy (PRS) Paper emphasizes it.
A number of initiatives to boost the microfinance sector in
Rwanda have been put in place so far, including the development of a legal and
regulatory framework. The development of a sector policy is underway. SNV, in
its attempt to strengthen the private sector and make a dent into the poverty
level in Rwanda, deemed it necessary to carry out an analysis of the
microfinance sector in Rwanda, in order to develop an appropriate microfinance
strategy which would ensure effective provision of financial services.
Consequently, an assessment of the microfinance sector in
Rwanda was conducted by Enterprising Solutions. It focused on the range of
financial services available; who has access to them and who does not, the key
constraints and opportunities to providing microfinance, the key stakeholders,
and their respective roles in creating an enabling environment and access of
the poor to financial services (Microfinance Assessment paper 2005 ).
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