This is the time of the year when financial institutions, particularly the Finance Ministry and the Central Bank present the country’s growth projections that in most cases depend on economic trends of the previous financial year. To make forecasts, one has to first review the previous year as well. While we wait on the Ministry of Finance and Economic Planning MINECOFIN and National Bank of Rwanda to do that and officially present figures of the actual outlook, we can at least be abstract, that by the end of 2011, growth is poised at 8.8 percent.

We also know from Governor Claver Gatete that the projection for economic growth in 2012, despite depending on the prevailing Euro zone debt crisis, oil prices and a weaker dollar weigh, is 7.6 percent.

However, the International Monetary Fund (IMF) seems to be carrying a little skepticism about the latter. After carrying out Rwanda’s third review of Rwanda’s economic performance, under the Policy Support Instrument (PSI) in December, the body warned that 2012 might not be as rosy as anticipated, unless reforms are stepped up, to boost prospects.

I find this a little contradictory. However, among the many warnings IMF signaled, there was one about the development of SACCOS that should not go without being deliberated. For the layman, SACCOs are just saving institutions and any discussion about them is pretty boring. SACCOs is basically an abbreviation for ‘Savings and Credit Cooperative Organizations’.

These co-operatives are developed on the basis of this philosophy, “… creating the opportunity for people to take responsibility for their own financial organisation.” Among very many advantages, a democratic process is an integral part of the SACCO and encourages people to take control of their own financial affairs.

According to that IMF, in Rwanda “… the establishment of a transparent and sustainable institutional structure to supervise SACCOs needs to be fast-tracked. The hiring and training of 60 supervisors was an important first step.Given the speed of rolling out these cooperatives as full-fledged lending institutions, and the risks involved, it is imperative that the necessary institutional structure be put in place without delay.” That is a warning from the IMF.

Now, who dares disagree with the IMF? Myself, armed with barely a few pointers, on the state of Rwanda’s SACCOs, I will attempt to differ a little positively.

Last year, Governor Gatete told the quarterly publication, Le Banquier, that NBR expects to have a SACCO in every sector in the whole country and 416 SACCOs in total. Already by September last year, 383 SACCOs had been granted authorization to start granting loans and district Mayors have already shown commitment to this cause.

The governor said, “Among those operational SACCOs, 17 have fully been licensed and we expect to have all Umurenge SACCOs licensed by the end of this financial year. We have also noted that Umurenge SACCOs deposits significantly increased to reach Rwf14 billion. The loans portfolio is around Rwf2 billion and we recorded an upward trend.”

Anyone’s worry about SACCOs in Rwanda would probably be management of the growing numbers. Also there could challenges on their working environment and probably the security of the funds. The SACCOs’ staff members could also benefit from training from NBR.

SACCOs are advantageous in a way that they create the opportunity for people to take responsibility for their own financial organization. Savings are mobilised locally and returned to members in the form of loans.

The ideal model invests 80 percent of mobilised savings to members in the form of loans. The money stays and works within the members.SACCO interest rates on both savings and loans are generally better than rates given by banks and the reason for this is that SACCOs have very low overheads compared to banks which pay low interest rates on savings but charge higher interest rates to cover their overheads.

And since they also educate their members on financial matters by teaching prudent handling of money, how to keep track of finances, how to budget and why to keep away from hire purchases and loan sharks, if management of numbers is the biggest worry, may be NBR might consider combining some of them into groups and probably this could bring efficiency.