Microfinance Insitutions in Rwanda

Hi All,

I have now been working as a YEN Associate for over a month in Kigali, Rwanda. While researching information for a capacity building resource guide/training module for youth organizations in Rwanda - I came across the Grameen Bank. As you may already know, the Grameen Bank and Grameen Foundation "help support microfinance programs that enable the poor, mostly women, to lift themselves out of poverty and make better lives for their families through access to financial information and services." I was pleasantly surprised to learn that Grameen is already partnering with MTN RwandaCell in a telecommunications project in 14 out of the 30 districts in Rwanda.

Background

Hundreds of MFIs operating as savings and credit cooperatives have sprouted across the country over the past decade, building a depositors' base three times that held by the commercial banks. Many evolved from aid agencies that emerged in the aftermath of the 1994 Rwanda Genocide.

The informal and formal microfinance sectors are both weak in Rwanda and the regulatory framework for MFIs needs to be further strengthened. The government is working to create norms and standards in order to strengthen the sector by enacting some of Africa's most progressive microfinance legislation and regulations.

The microfinance industry in Rwanda contributes significantly to the provision of basic financial services, but it lacks capacity in several areas. Capacity building is needed in management, accounting, internal controls, development of new products, and setting up Management Information Systems (MIS).

Village Phone in Rwanda

With its high population density and low rural teledensity, Rwanda was a natural choice to begin our second program in Africa. Officially launched in 2006 after a year-long pilot with 50 micro-entrepreneurs operating Village Phone businesses, Village Phone Rwanda was created as a joint venture between Grameen Foundation and MTN Rwanda. The Village Phone business is called Tel’imbere, loosely translated as “telephone forward” in Kinyarwanda, Rwanda’s main language. Currently located in 14 of 30 districts, we plan to have over 3,000 Village Phone Operators by 2009.

Village Phone: Connecting Technology and Innovation

Access to affordable telecommunications simply does not exist for millions in the developing world. For some, placing a phone call can require traveling over six miles from their homes. This can mean leaving work and losing out on desperately needed income. Cut off from easy access to communications, these communities are at both an enormous economic and social disadvantage.
Based on the pioneering work of the Grameen Village Phone in Bangladesh, Village Phone and Village Phone Direct extends the benefits of affordable telecommunications access in a sustainable, profitable and empowering way. This relatively inexpensive technology can solve many of the problems the poor in rural villages have faced for decades. Grameen Foundation serves as a catalyst and creates the linkage between the telecommunications sector and the microfinance sector to enable microfinance clients to borrow the money needed to purchase a “Village Phone business” – literally, a business in a box. These grassroots entrepreneurs, or Village Phone Operators (VPOs), operate their businesses in rural villages where no telecommunications services previously existed; they rent the use of the phone to their community on a per-call basis. The VPOs provide affordable rates to their patrons while earning enough to repay their loans and earn profits that allow them to make investments in their children’s health, nutrition and education, and in other business ventures.

Village Phone allows everyone to benefit. VPOs have strong, thriving businesses. Microfinance institutions provide financial services and earn income on the loan interest, as well as commissions from the sale of prepaid airtime cards to their clients. They also attract new clients who are drawn by the opportunity to start a technology-oriented business. Telecommunications companies we partner with benefit by tapping a new market while at the same time furthering their social responsibility objectives. More importantly, individuals living in rural communities gain access to affordable telecommunication services linking them to their friends, family, business contacts and the world.

Overcoming HIV and Building Her Community

Marie-Claire's story - One of Grameen Foundation’s first Village Phone Operators in Rwanda rises above the odds

Village Phone Operator Marie-Claire Ayurwanda stands on the rock foundation of the house she is building in Setwara, Rwanda, and looks at the progress. "I want to finish building this house for my children before I die," she says with resolve. As a woman living with HIV/AIDS, the weight of her words is heavy with a history of struggle and challenge. Yet when she talks about her present and future, her smile is light and her laughter comes easily. The years have not been easy. She had a son 17 years ago and then took in her brother’s two children when he was killed in the 1994 genocide. Her husband died in 2003 of an unknown cause. She then remarried and had a daughter. After learning that her new husband drank too much, she left him. Then, she discovered she had, as she calls it, "the Virus." After her husband died, Marie-Claire decided to start a business and took a 20,000 franc ($40) loan from Village Phone microfinance partner URWEGO to open the Isimbi Restaurant. The profits from the restaurant help support the four children in her household and pay school fees. Set against the backdrop of the rolling Rwandan hillside, Marie-Claire serves goat brochettes (skewers) and Irish potatoes. Her laughter bounces off the bright blue walls of the restaurant as she talks with her customers and employees. And if a customer wants to make a phone call, she proudly takes them to a separate, private room where she has set up her Village Phone.

When Marie-Claire heard about the Village Phone pilot program early in 2005, she quickly got a phone. The business turned out to be profitable enough for her to pay her phone loan off in 5 months (rather than the standard 6 months). So now, all profits from the phone are hers. "Marie-Claire is one of the top five operators in Rwanda out of the fifty businesses created during the pilot phase of the project," George Conard, Technical Project Manager for Grameen Foundation, said. "She sells nearly thirty minutes a day and the phone generates about US$12 a week. In a country with the average income around $230 year, the extra income from the phone has a huge impact on her life." "In addition to paying school fees for my children, I bought the land and the foundation for my new home with the profits from my Village Phone," Marie-Claire says. "If I get some more business to do, in a few years I will die as a rich woman." Work, she says, is what keeps her strong.

After learning she had the virus, she took the risk to tell other business people in the community. "When I told them, they liked me very much because I told the truth," she says. "People see that I have the virus and am still doing business. I am respected in the community and people come and use the phone because of that." Being honest also helps other people living with HIV/AIDS because they see how antiretroviral drugs help Marie-Claire be less tired. "I am very strong because of the medicine," she says. "And I was able to tell my friends, and now they are on the drugs too."

In her village, she is the president of IMPUHWE, an association of people living with HIV. She is now interested in adding a second phone that she can run in another small village. When asked how she would spend the additional income, her goals are focused on developing her community. "I want to buy a pickup," she says. "People in the association have their own gardens with Irish potatoes. With a pickup, I can take the potatoes to Kigali and sell them." Marie-Claire’s son Jean d'Amour, 17, is also interested in giving back to the community. When home from boarding school, he helps his mother at the shop and with the Village Phone to raise money for school fees. "I am very, very, very happy I can go to the Rambura Boys School," he says. "I want to be a doctor to help my neighbors and friends."

Contributed by Tamara Plush

For more information on the work of the Grameen Foundation: www.grameenfoundation.org

RWANDA: Twelve years on: The post-genocide youth

Young people taking part in voluntary activities in Kigali. Twelve years after the genocide, young Rwandans are eager to rebuild their society

NAIROBI, 23 February 2007 (IRIN In-Depth) - Twelve years after the massacres of 1994, Rwanda’s younger generations are struggling to cope with their lives. More than half of the country’s population is under 25-years-old, with 15- to 24-year-olds accounting for nearly a quarter (UNFPA). With one of the world’s highest proportions of orphans and youth-headed families, the difficulties faced by youth in Rwanda are extensive. The killing of almost one million Rwandans during the 100-day massacres deeply affected the country’s social fabric, especially at the family level.

Mobilising youth

The Rwandan minister in charge of youth, sport and culture, Joseph Habineza stressed at a recent press interview that “today, there is an emphasis to involve young people directly into the national development, as a main force of the nation”.

The massive involvement of young Hutu people in the genocide has led to an increasing awareness of the challenges that Rwandan youth face. The government has launched various initiatives to allow young people to take part in the reconstruction of the country and the reconciliation process between communities. Policies are aimed at those aged between 14 and 35 – more than a third of the total population.

Persuading the country’s youth to take part in rebuilding Rwanda has not been difficult. There is a widespread feeling among the young that the country needs to move on from its past, and that everyone should focus on the future. Young people in Kigali regularly take part in ‘Muganda’, mandatory community work every last Saturday of the month. They told IRIN that they happily took part because they wanted to ‘improve’ their country and make it more beautiful.

Another initiative is the National Unity and Reconciliation Commission’s (NURC) ‘Ingados’. NURC, created in 1999, targets youth through temporary camps where different youth groups are taught how national unity and reconciliation should take place. Courses include history and civic education aimed at ‘eradicating the consequences of years of exclusionary ideology that led to the genocide,’ says Geoffrey Murangwa, legal officer at NURC.

Youth facing justice

Exact figures of the number of young people that took part in the genocide are not known – whether their involvement was voluntarily, under peer pressure, or forced. They are, however, all facing justice for their role in the atrocities.

The country’s prisons are overcrowded, and the justice system has become overburdened bringing perpetrators to justice, so a new system – the Gacaca courts – was set up in July 2006. The structure, inspired by the pre-colonial Rwandan justice system, is currently trying genocide suspects in the communities where their crimes were committed. After the genocide, an estimated 120,000 people - adults and youth - were in put in prison. Tens of thousands waited for years until the new courts were established.

Another means of relieving prison congestion was implemented by the government in 2003. Those aged between 14- and 18-years at the time of the genocide were released from prison in return for a confession and pending a trial at a later date. Confessions carried the promise of a reward of a significantly reduced sentence, half of which could be spent doing community service or Travaux d’Intérêt Général (TIG).

Those taking part in the genocide have been classified into three groups: the planners, instigators and masterminds behind the genocide; the perpetrators, conspirators and accomplices causing death; and, those who stole and looted but did not kill.

Emanuel Twagirumukiza, the Executive Secretary of TIG at the Ministry of Justice told IRIN that an estimated 300,000 suspects falling under the second category could serve a part of their sentence in the TIG at some future date.

The first TIG camp opened in September 2005, but it was not until October 2006 that a further seven were opened, admitted Twagirumukiza.

Boniface, 29, spent four years in prison and decided to confess his guilt in 2000 after which he was temporarily released. He was 17 at the time of the genocide, and after having been tried by his local Gacaca, his sentence was commuted to three years community service at the Mageragere TIG in the Nyarugenge district of Kigali. He said the majority of his 200 fellow workers, commonly called tigistes, were in their late twenties and early thirties.

While most of the imprisoned young adults are now looking forward to the end of their sentences, their future is not very bright. Most of them have never received an education, and as a former tigiste can only look forward to a job in the construction industry.

The chief coordinator of Mageragere camp, Leopold Burangayija-Mugarura, disagrees. Burangayija-Mugarura argues that after having spent so many years in prison, the tigistes have had an opportunity to acquire new professional skills. At Mageragere, the convicts have been able to learn stone quarrying, and have built 64 houses for vulnerable people, many of whom are genocide survivors. Other efforts to rehabilitate tigistes include events such as football matches.

More than 7,000 people are still waiting to enter the TIG programme, said Twagirumukiza, and that figure will rise as the Gacaca process continues. However, it is still not clear how many young people remain in prison, as the official line states that all 14- to 18- year-olds at the time of the genocide were released on confession. The League for Human Rights in the Great Lakes Region (LDGL) revealed that in 2005 there were still some 861 minors, allegedly convicted for genocide, being held in the country’s 12 largest prisons.

Living in the shadow of genocide: The plight of the survivors

Life was never meant to be hard for Gervais, 19, who was born into a relatively wealthy family in Kigali. His mother worked at the Rwandan National Bank in 1994 at the time of the genocide. When the Interahamwe - the extremist Hutu armed gangs - first came on 7 April 1994, a day after the start of the genocide, she gave them money in exchange for their lives. However, it soon appeared that money was not enough. The family fled to nearby Gitarama province where all were killed except himself, his sister and his brother. Gervais was just seven-years-old, but remembers that time well: “My brother was 12 and he suffered a great deal. He had to work hard to make us live.” Many young people lost their family during the genocide, and have struggled to cope with caring for themselves and their siblings.

Claude Rutagengwa, Regional Coordinator of the Great Lakes Peace Initiative (GLPI), found, in a survey conducted in 2005, that approximately 195,000 youth under 20 years of age are the heads of households in Rwanda. Although they might have not suffered directly from the atrocities, their lives have been deeply affected by the death of their relatives, from years of exile in neighbouring countries, the effect of war delaying their studies, and the trauma of witnessing atrocities at such a young age.

Gervais told IRIN that at no point in his childhood had he been taken care of by adults. He and his siblings are now living on their own in a house given to them by the new Tutsi-dominated government. The FARG (Victims of Genocide Fund) later financed his brother’s and sister’s studies in secondary school, but Gervais has been told it will not be possible for him. Nevertheless, he considers himself lucky.

“A lot of young people like me don’t even have the chance to have a house, they are wandering in the streets. You often meet these young people who are working in somebody else’s house although they are bright and could have pursued their studies,’’ revealed Gervais.

Many of Rwanda’s youth do not get the opportunity to complete secondary school. According to UNICEF statistics, the secondary school enrolment ratio in Rwanda is among the lowest in Africa and the world, amounting to 15 percent for boys and 14 percent for girls.

Eric, 25, who witnessed the death of both his parents in April 1994, complained that the government did nothing to help him and his two brothers after the genocide. Although they were initially taken care of by a Belgian priest, the problem of their food and shelter continued after the priest died.

Eric recently obtained a short-term contract at the German Red Cross in Kigali to look after young orphans. He said many come from the streets but often return to it and become delinquents. Traumatised by the past and with little adult guidance or care, they slip back to the life they know - which will in turn lead them to theft, violence and drug trafficking. But, Eric added, “A lot of young people living in the streets also take drugs themselves, to keep their spirits up, to win the force.”

In the Gatenga district of Kigali, the Don Bosco centre provides education and vocational training for vulnerable children and youth up to 25-years-old. Skills taught include carpentry, leatherwork, sewing and farming. There is also a possibility for young people who have fallen behind in their studies for whatever reasons (refugee returnees, orphans, youngsters who lost trace of their parents) to undergo a one-year catch-up course so that they can take official exams.

Father Jean-Pierre at the Don Bosco centre told IRIN that the main problem young people face in the centre is not entirely related to their professional orientation. “For most of them, the trauma of having lost their parents and having no family at all is very heavy, even if we provide them with food and care, we will never replace that.”

Report can be found online at:http://www.irinnews.org/Report.aspx?ReportId=70037