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.

In order to meet the social capital required by the National Bank, the cooperatives are embarking on increasing membership share, which in general ranges from 5,000 to 10,000 francs.

During the workers’ cooperatives general assembly held on September 30, it came to light that most presidents leave all the work to the managers and do supervise the operations. This enables malevolent managers to embezzle funds as they are accountable to no one.

Over the past years, the cooperatives had earlier contributed money for the federation’s building in Kacyiru. The four storey building cost the cooperatives Frw 350 million, but was later be sold to the social security fund of Rwanda for Frw 565, 610, 000; the sale was ordered by the National Bank because the Federation of workers’ cooperatives had gone bankrupt.

The money would be distributed among the cooperatives according to the amount they had contributed. Taxes, security, cleaning, and constructor’s fees which totaled to Frw 40 million had first to be deducted. As the contributors ranged from the cooperatives to individuals, it was agreed upon that Frw 39 million was to be set aside as money for emergency.

Embezzlement 

There were also debts that the former workers’ union owed cooperatives, yet apparently the directorate had long gone bankrupt, while those who embezzled the funds have fled the country claiming that they have gone for treatment abroad.

“We are currently working on the dossier, when we have finalized it we shall ask them to repay the money and if they refuse, we shall seek justice,” Martin Kampanyana, the president of the restructuring commission said.

As for those who have fled the country, Kampanyana explained that there are many ways of extraditing them. “The world is becoming small and if need be we can use the services of Interpol,” he said.

He revealed that there is a lot of theft still going on and that the commission is committed weed out the culprits from the cooperatives. “We want to halt the mismanagement and embezzlement that characterized the worker’s federation, and become a better organization that profits its members,” Martin Kampanyana said.

During the general assembly, the prospect of a new federation was discussed and members agreed it should consist of workers’ cooperatives’ members, unlike in the past when there were people in the directorate who did not belong to any of the cooperatives.

The Governor of the National Bank remarked that with a competitive federation in place, a lot of issues will be taken care of. He said that the new union must monitor all the cooperatives and develop the capacity to be able to run the business.

“Of course it is a business entity and therefore it has to submit its business plan and plan of action, so that it can be issued with a license to operate,” Francois Kanimba said. He insisted that the federation should be profitable so as to improve the welfare of its members. “Soon, some Ministries shall be channeling their workers salaries through the federation,” he said.

Christine Mukakiramba, the head of training at Ministry of commerce, who is also a member of the task force at the ministry, urged cooperatives to speed up the process of fulfilling the requirements to acquire legal status. The conditions include; having the members registered, with only individual members being allowed; shares among members should be equal; and the cooperatives should have a committee, independent from the board of directors, that is charged with giving out credit to members and following up the paybacks.

“The cooperatives should meet the conditions within 15 days after the General Assembly, as Ministry will begin training of cooperatives countrywide,” Christine Mukakiramba said. She added that the question of setting up the federation shall be dealt with after all the associations have acquired legal status.

It is scheduled that by the end of the year, all issues relating to workers’ cooperatives will be solved. “All the cooperatives should work hard to meet the deadline as I believe the commission will have completed its task,” the Governor of National Bank said.