- Feed the Future Rwanda Nguriza Nshore team
Shifting the Terrain of MicroFinance: AMIR’s Journey in Rwanda
Photo Credits: WFP/JohnPaul Sesonga
USAID's Feed the Future Rwanda Nguriza Nshore (RNN) is an access-to-finance project promoting the emergence of a vibrant agri-business system in Rwanda. As COVID-19 emerged and began disrupting economic activity, financial organizations struggled to adapt, especially Micro-finance Institutions (MFIs) and Savings and Credit Cooperatives (SACCOs). The blog provides an example of how a local apex organization, the Association of Microfinance Institutions in Rwanda (AMIR), adapted to better represent its 458 MFIs and SACCOs. AMIR had to respond but needed to figure out how best to respond, given the magnitude of the disruption. Since AMIR was already working with RNN, they engaged RNN to work through an evidence-based process to support its members in weathering the substantial challenges brought on by covid 19. Through the process, AMIR and RNN were able to adapt quickly based on feedback from AMIR members. Of particular importance was AMIR and RNN's efforts to ease access for AMIR's members to the GoR's Economic Recovery Fund (ERF) to smooth their ability to manage covid-19. From a market systems perspective, RNN's approach to supporting AMIR, as they took the lead in getting feedback, identifying options, and developing a support plan, provides a good example of how to facilitate capacity building through experience. Through the process, RNN not only supported a process that allowed many MFIs and SACCOs to manage COVID-19 effectively but also improved the ability of AMIR to provide value-added services to its members over the long term.
Organizational strengthening is a critical stepping stone on the journey of market systems development, as it builds and maintains momentum toward sustainable and lasting change. This is especially true for financial market systems, as can be highlighted by USAID's Feed the Future Rwanda Nguriza Nshore (RNN) Activity's partnership with the Association of Microfinance Institutions in Rwanda (AMIR).
RNN is an access-to-finance project promoting the emergence of a vibrant agri-business system in Rwanda. To accomplish this, RNN applies a market systems approach to strengthen private sector firms, the financial services industry specifically and the overall enabling environment. AMIR, established in 2007, provides advocacy services for its 458 members and is the country's professional umbrella organization for Microfinance Institutions (MFIs) and Savings and Credit Cooperatives (SACCOs). With AMIR being a critical enabling actor in Rwanda, RNN recognized AMIR's strategic position to influence the microfinance landscape in Rwanda and began a partnership in 2019 to strengthen and expand its advocacy and service delivery capabilities.
At the start of the partnership, RNN began assisting AMIR by conducting a baseline assessment to better understand the technical assistance SACCOs needed in the upcoming fiscal year. With this, AMIR learned that its members desired targeted training and consulting on specific microfinancing topics such as customer protection, portfolio management, and flexible loan repayment structures. As a result, RNN worked with AMIR to incorporate members’ feedback, thus beginning a process of collaboration and co-design to improve financial services for SMEs and agriculture. Additionally, through RNN’s support AMIR developed trainings as part of their syllabus offerings and together trained 33 MFI and SACCO managers on credit management during the fourth quarter of FY 2019.
AMIR's responsiveness, value addition, and operational performance support services to the financial sector was of great importance, specifically during the outbreak of the COVID-19 pandemic. When the potential economic fallout due to the COVID-19 outbreak became evident, AMIR and RNN quickly shifted the focus of their collaboration. Robin Padberg, RNN's Chief of Party, said it was "clear that the economic sector and SMEs would be most vulnerable to these shocks. We needed to know how to best mobilize capital and investments." AMIR worked together with RNN to conduct rapid assessments on the impact of the COVID-19 pandemic on the lending activities of its members. Additionally, the Government of Rwanda (GoR) and the international community took steps to mitigate the financial fallout. The GoR, with assistance from other partners, launched an Economic Recovery Fund (ERF) of $100 million. But, there were concerns about the absorptive capacity of microfinance institutions, including SACCOs, to effectively mobilize these funds to ensure business continuity and economic recovery. At the onset, members lacked the skills to manage capital under the challenging conditions, whether it was their own or from the ERF. Thus, a series of assessments were conducted to determine the specific COVID-19-related gaps, opportunities, threats, and interests of AMIR members to manage loans that had already been disbursed as well as the ERF repayment plans.
With the support of RNN, AMIR further adapted its training and advisory services to help MFIs and SACCOs alter their strategies and tactics to allow them to weather the COVID-related challenges effectively. AMIR also began increasing their support to SACCOs/MFIs to make their loan management processes more efficient and tailored to the new pandemic reality to better support their customers, who were also facing the effects of the pandemic. Through these surveys, AMIR learned that members needed mechanisms or strategies to deal with the challenges that fell outside of their typical planning processes, such as deviating from their standard guidelines for traditional loan forgiveness. In response, AMIR developed a new training module entitled "Business Sustainability Plans" that assisted members in developing "plans B and C" if clients could not keep up with their loan repayments, helping members to stay ahead of portfolio planning. These auxiliary plans included adjustments such as loan restructuring and extending loan periods.
Another challenge that the surveys highlighted was technology. Most organizations, especially SACCOs, operated manually at the time of the pandemic, and during pandemic-related lockdowns, clients could not move from place to place. The lockdown thus resulted in clients' inability to access and withdraw their funds, affecting both clients and members. Through developing and testing services for its members, AMIR continued to shape its service offerings to include increased support around operational performance and growth. As a result, AMIR members were better able to manage their portfolio of businesses that had been hit hard by COVID-19, including improving loan rescheduling processes. AMIR members also expanded their new business portfolio and increased the number of clients accessing and appropriately utilizing loans. Critically, businesses were able to start working again, and activity returned to the hospitality, agriculture, and transport sectors, to name a few.
Outside of COVID-19 relief services, AMIR continues to offer membership training in various skills required for MFIs and SACCOs to develop products, render services, and grow their customer base. Today, through developing and testing its services for its members, training is one of AMIR's highly valued offerings. With a permanent internal staff of ten financial services trainers, AMIR's training services focused on financial management, business sustainability and planning, loan recovery, marketing, and reporting. In addition, AMIR uses the assessments to identify knowledge that they can develop and offer training options that address gaps featuring relevant experts from their network of consultants.
Additionally, AMIR offers its members a variety of learning opportunities. For example, this past October 2022, AMIR organized the Africa MicroFinance Week in Kigali. Furthermore, this coming March 2023, AMIR is organizing Rwanda's Microfinance Technology Summit. Market players, from exhibitors to sector practitioners, will come together at this summit to exchange lessons and learning. Additionally, AMIR's members learn from peers in different country contexts and bring these learnings back to Rwanda. For example, in 2019 members traveled to Nigeria to learn more about how these MFIs secured certification with smart companies. In this context, AMIR's Executive Secretary, Jackson Kwikiriza, says that AMIR is always "ensuring that they [member organizations] learn from what they have not been able to achieve and implement and improve their performance."
With these offerings, AMIR regularly engages with its members to ensure that they derive value and are satisfied with the level and range of technical support, coaching, and knowledge events. AMIR looks forward to strengthening its own ability to organize learning events and conferences to bring together national market, regional, and global players.
AMIR realized the value its members placed on such services, allowing the organization to shift how it marketed itself to potential new members. As a result, AMIR began to gain a reputation for delivering value to its members, changing its growth trajectory. As of 2022, AMIR has trained over 280 staff members from 170 SACCOs' management teams and other financial service members.
AMIR is making significant steps to being a commercially sustainable industry association that delivers value to its members through its advocacy and technical support services. AMIR's focus on evidence and member responsiveness is key to this evolution. AMIR continues to invest in new and improved services, including new training offerings, adapting its support for the revised government support fund, and expanding and improving its advocacy services. Through this journey, AMIR has emerged as a regional example of an industry association that aligns with Rwanda's vision of becoming a recognized regional financial services center.
AMIR has many exciting prospects in its future as it continues to support the government of Rwanda's effort to increase the proportion of adults formally served by banking institutions to 100% by 2024. In a FinScope survey conducted in 2008, only 21% of adults had access to formal or informal financial products or services. In the latest FinScope survey for 2020, financial inclusion had reached 93% which includes the ability to service those in remote areas. To further bridge this gap, AMIR and its members are prioritizing the use of digital means to efficiently reach rural populations currently underserved with formal financial services. In 2023, AMIR will continue to deliver value and be responsive to member needs, serving all locations and types of clients, and support Rwanda as it continues toward its goal of being financially inclusive and a regional leader in small and medium enterprise (SME) finance.
Feed the Future Rwanda Nguriza Nshore team