Gradually, the non-performing portfolio of the cooperatives had increased to more than Frw 400 million as there was no structured process that determined who qualified to access a loan or not. Surprisingly some of the loans were issued out with out any form of collateral. The then existing federation which grouped twenty credit and savings cooperatives, did not supervise nor follow-up the management of the cooperatives as the debts from bad loans continued to soar.

This caused the National Bank, in collaboration with the ministry of commerce, to intervene as association members were being ripped off by a few individuals who were driven by personal interests. The former directorate of worker’s credit and savings cooperatives was relieved of their duties, and the National Bank together with the ministry of commerce and the twenty credit and savings cooperatives, set up a commission to help restructure and reorganize the cooperatives operations.

Last July, at the time the commission was put in place, none of the cooperatives met the conditions imposed by the Ministry of Commerce and the National Bank. Some of the cooperatives had accumulated non-performing loans worth Frw 200 million, with debtors not being able to pay while others had changed their addresses and thus could not be found.

For the cooperatives to obtain an operating license form the National Bank, they should have a share capital of Frw 5million and prove their capacity in debt collection. So far, none of the workers’ cooperatives has met all the requirements, but the most promising ones – Byumba, Nyanza, Nyamirambo, Nyamata and Rusizi – were awarded the license.

“They had made significant improvements in making sure the debts are paid back,” Francois Kanimba, the Governor of the National Bank explained.
He added that the bank has contacted the local authorities to help the cooperatives to locate the debtors and ask them to pay. Cooperatives have been advised to hire professional liquidators so as to be able recover all the bad debts.