Background

Savings and Credit Co-operatives first appeared in Germany in the 1870's. The idea moved to North America in 1900 with European immigration. Canada, the United States, Australia and Ireland had the most established movements. In many regions of these countries SACCOs are much larger than the commercial banks.

Globally there are almost 100 million individual members in 60 plus countries around the world and. SACCOs are a member of World Council of Credit Unions. Through this relationship SACCOs enjoys a reciprocal relationship with member countries throughout the worldSACCOs was formed in 1993. It evolved from the Cape Credit Union League (SACCOs), which was formed in 1981. At this time various Catholic Church parishes decided to form Credit Unions and SACCOs was formed to help them to coordinate their activities and standardize their operations. At this time though the Credit Unions were formed as social organizations and did not operate their co-operatives as businesses. This brought about a whole lot of problems. Because the Credit Unions did not pay good interest on savings but gave out loans very cheaply, members were not interested in saving with the SACCOs, only getting loans from the SACCOs. Without savings and shares the SACCOs were unable to grow. However, because members were enjoying the cheap loans, they did not want to change the way they operated. Without growth, it was inevitable the SACCOs would stagnate (SACCOs.2011).


A second problem that existed in those days was people were scared to take up leadership positions as there existed a state of emergency in the country during this period. This resulted in the ministers of the parishes taking a leadership position in the SACCOs. If the minister was transferred to another parish, it would depend whether the incoming minister had knowledge about a Sacco and whether he was interested in continuing its activities. However the idea of a Sacco grew in impoverished communities as an alternative to other savings schemes, where you could get cheap loans. In 1987, the SACCOs extended its activities outside of the Western Cape Region and formed itself into the South African Credit Union League. The problem of non-viable SACCOs still existed and in 1991, when the World Council of Credit Unions did an assessment of the viability of the movement in South Africa, they found that only three of the existing 47 SACCOs were viable. As a result of much discussion within the movement it decided to change its entire orientation toward a business orientation. The viable co-operatives argued that making a surplus and developing strong SACCOs was in member’s interests in the longer term, rather than short-term gain of cheap loans only.Thus in 1993 the Savings and Credit Co-operative League of South Africa (SACCOs) was born. ((Saccos.2011)  
According to RCA, (2012) the government of Rwanda started to think of establishing umurenge Sacco in 2008; after carrying out a study that showed 52 % of Rwandans had no access to formal financial institutions and keeping the money by traditional means such as digging a hole. Umurenge SACCOs is a government of Rwanda initiative as elaborated in the Vision 2020 development agenda that aims to increase access of financial services to citizens. The concept of Umurenge Sacco was initiated on the understanding that banks and other financial institutions are more concentrated in towns and less spread in rural areas to serve the poor.


As such, establishing a Sacco at every Umurenge would bridge this gap. This would in effect, encourage local citizens to break the stigma of fearing financial institutions. Local citizens would thereafter be able to save, access loans and credit for different business activities, thus allowing them to invest and graduate from chronic poverty. Since the introduction of Umurenge Sacco, different government and non-government departments especially working in the areas of decentralization and local governance have made efforts to mobilize Rwandans towards this program. The Ministry of Local government and the Rwanda Cooperative Agency (RCA) have been at the helm of this drive. Substantial progress has been made.  In a bid to better understand the progress achieved in Umurenge Sacco implementation, the Governor of the Central Bank visited all the provinces of the country (RCA, 2012)