The Microcredit Investment Legacy of Plundering Poor People’s Savings: National Bank of Rwanda Shuts Down 8 Local Microfinance Institutions (MFIs)

The National Bank of Rwanda (BNR) shut down local 8 MFIs last Friday. The closures of Intambwe SA, Ongera Microfinance SA, Gwiza Microfinance SA, CMF Urugero SA, Urumuri Microfinance SA, Coopec Intera, Coopec Iwacu and Coopec Ubumwe Iwacu represent the beginning of an anticipated MFI crackdown by BNR.

There are over 200 MFIs in Rwanda, many of which emerged after the Rwandan Genocide in 1994. Since 2004 especially, the nation has seen the rapid growth of unregistered and unregulated MFIs. A depositors base three times that held by the commercial banks has been built. A statement from the Rwanda Microfinance Forum, a consortium of local MFI’s striving to set industry standards, lays the blame on the lack of a microfinance sector policy.

BNR’s Governor Francios Kanimba said that many MFIs opened without proper authorization or adequate capital: “We have a situation where for some institutions, 85% of the capital was contributed by people coming in [the customers].” Mr. Kanimba said the decision to close the 8 MFIs was a result of their mismanagement of funds and losses from poor credit management practices.

It should come as no surprise that the MFIs blame the government and that the government blames the MFIs. No one would ever point a finger at the irresponsible international donors who have spawned the glut of 200 tiny MFIs in Rwanda, and over 10,000 tiny MFIs around the world.