Covid, weight of bad debts take toll on teachers Sacco
Monday April 26 2021
Some teachers have not been able to service their loans leading non-performing loans in Saccos. PHOTO | CYRIL NDENGEYA
Teachers' savings and Credit Co-operative, Umwalimu Sacco, has tightened loan requirements as it seeks to reduce losses arising from the high turnover of teachers.
Rwanda Today has learnt that the teachers Sacco is overwhelmed by increasing bad debts attributed to Covid-19 pandemic as thousands of teachers left the profession for other opportunities while many others lost employment in private academies.
The pandemic also left several members of Sacco’s assorted credit products unable to meet their loan obligations even after being allowed to do restructuring. There are concerns this could rise the level of non-performing loans initially estimated at Rwf2 billions before the pandemic struck, and could have far-reaching effects on the financial institutions’ capacity to lend.
According to the Ministry of Education, an estimated 7,000 teachers quit the profession following the ninemonth closure of learning institutions due to the global pandemic.
Educationists suggest that many are the private academies’ teachers who lost employment. Those in government schools either found better paying jobs or used the prolonged closure to venture into entrepreneurship.
While this sent the education regulator back to the recruitment process to fill up the vacant teaching positions, it is estimated that a section of them had outstanding Sacco loans which are hardly recoverable.
“We are yet to complete our analysis to tell exactly how many defaulted because a number of schools just reopened recently. However, the turnover is the main driver of non-performing loans the Sacco has to date.
We will need to devise ways to maximize recovery,” Emmanuel Karuranga, the Sacco’s director in charge of Business Growth and Development told Rwanda Today.
Ranked the least paying public service sector in the country, the teaching ranks among those with the highest annual turnover. Education institutions indicate that the turnover, estimated at around 20 per cent, rose sharply after the prolonged closure of academies allowed teachers to venture into different businesses or got occupations elsewhere. However, while the Sacco allowed members who transition to other sectors to keep banking with it, its management indicated that many resorted to working with other financial institutions, leaving behind unpaid debts.