Umurenge SACCOs are savings and credit co-operatives whose objective is to pool savings for members and in turn provide them with credit facilities while VUP is an Integrated Local Development Program to Accelerate Poverty Eradication, Rural Growth, and Social Protection.
The move follows complaints from VUP beneficiaries who raised concerns over a high-interest rate of 11%.
Rwanda Cooperative Agency (RCA) has released a letter prohibiting all Umurenge SACCOs to offer VIP loans. It also announced the exemption of the higher interest rate.
The letter signed by the Director General of Rwanda Cooperatives Agency, Prof. Jean Bosco Harelimana indicates that the decision is based on resolutions of the 16th National Leadership Retreat related to improving performance of Umurenge Sacco especially management of VIP loans.
“The management of Rwanda Cooperative Agency is writing to inform you to stop offering VUP loans with immediate effect after receiving this letter but rather embark on recovering loans,” reads part of the statement.
Prof. Harelimana has told IGIHE that the VUP fund management was passed over to grass root leadership.
“The funds will be allocated to beneficiaries through accounts of grass root leadership levels in Saccos. Projects will be approved at the sector level, then Saccos transfer the funds to allocated accounts. It is unlike the past where Saccos would also get involved in the approval of projects,” he said.
“The 11% interest rate has been exempted. Saccos will, however, deduct 2% service fees,” he added.
During the 16th National Leadership Retreat, President Paul Kagame expressed concern over the raised interest rate for VUP beneficiaries from 2% to 11%. He requested concerned parties to revise the program to efficiently facilitate beneficiaries overcome poverty.