Before the sky has even started to change into morning colors, Francois NZAMVUGANKIZE is awake and has begun his work day, which is baking and selling bread. “I get up at 5am and I go to the shops to buy the materials I use for making my bread,” says Francois. He is twenty-five years old, a husband, and father of two young children. Up until four months ago he struggled to provide for his young family, but now they are on the road to financial security and success.
This drastic life change is the result of Francois becoming a member of a Parlement des Jeunes Rwandais (PAJER) Village Savings and Loan Association (VS&LA) Group, ICYIZERE. A VS&LA is a group of 15-30 people who save money together and take small loans from accumulated savings. “Before I joined the group I went to businessmen and asked for the wheat flower to make the bread as a loan, and then I would pay them back with the money I earned. My life was not good because I couldn’t access any loans. I couldn’t get money to develop my business. Getting loans from other places meant a high interest rate, so that was a problem. Feeding my family was difficult, because I couldn’t buy a bike for transporting my bread to the small shops which meant I wasn’t able to sell very much,” explains Francois. Francois is able to clearly see and communicate the tremendous impact that being a part of ICYIZERE has had on his family and business.
PAJER’s mission is to promote peace, reconciliation, and integrated development through dialogue among the youth. PAJER has recently entered into a partnership with and received a grant from Building an Inclusive Financial Sector in Rwanda (BIFSIR)*, a joint project of the United Nations Capital Development Fund (UNCDF) and United Nations Development Programme (UNDP). BIFSIR’s objective is to contribute to the capacity building of the various stakeholders at the macro, meso, and micro levels, with a view to supporting the development of sustainable, quality, and diversified financial services that are accessible to less advantaged Rwandans, both in rural and in urban areas, and to improving their economic and social status.
The BIFSIR funding will go towards PAJER’s ultimate desire of providing “Linkages” between VS&LAs and formal financial institutions. Patrick KARANGWA, PAJER Executive Director, explains, “This is done through providing savings and loan services to the VS&LA groups in the form of bank products available on the market which should at least correspond with the demand of the clients (VSLA’s groups).
His first loan from ICYIZERE was only $8 and now he has a loan worth $25. When he initially started saving with ICYIZERE he only saved $0.33, but with diligence, in only four months he has saved more than $15. As a member of ICYIZERE, Francois receives training from PAJER staff members to help him understand the importance of saving and to ensure that his business thrives.
Because the goal is for VS&LA groups to enter into “Linkages” with a formal financial institution, we asked Francois his impressions of banks and his current involvement with them. “My perception of a bank is that when you save your money in a bank you have collateral and you are eligible for a bigger loan,” he said. “I have opened an account at a bank. The bank gave me the impression that they could give me a bigger loan to invest in my business, so that my business could grow. I don’t save in the bank because I don’t have enough collateral for a loan. So, I just save in the group,” he continued. He went on to explain, “I am thinking that in the future I could get a bigger loan if I save more money to boost or grow my business. Today I have money to buy a bike, but if I get a bigger loan I could buy a motorcycle”.
Francois is a prime example of a VS&LA member who is quickly reaching a point in his business where a “Linkage” with a formal financial institution will be needed to further grow his business. If ICYIZERE or Francois as an individual client was to be “Linked” to a formal financial institution, Francois could receive the opportunity to access the financial products necessary for his business and family to continue to flourish. It only took $8 for him to achieve the success he has accomplished thus far. Just imagine what he could do with even more financial resources! “The impact is that I got a loan from the group and through the loan I invested in my business, and with my business’s profits I was able to buy a sewing machine for my wife, so now she can make money being a seamstress. I can buy food and milk for my children, and clothing. My children are healthy and happy" concluded Francois.
* UNDP/UNCDF Project, BIFSIR has the objective to contribute to the capacity building of the various stakeholders with a view to supporting the development of sustainable, quality, and diversified financial services that are accessible to less advantaged Rwandans, both in rural and in urban areas, and to improving their economic and social status.