Teachers worry about 16% high interest rate on loans

By The Inspirer Writer.

Teachers lament high interest rate of 16 percent on loans charged by Umwalimu Sacco Cooperative this money is under the subsidy from their savings.

Umwalimu Sacco is a cooperative that was established to improve the welfare of teachers where they get paid from their bank accounts in this cooperative, leaving 5% of their salaries on the accounts as savings.

This money deducted from their salaries is the current savings of a teacher who already has enough shares to receive the loan, their complaints are based on the fact that this 16 percent interest rate is higher and backwards their development instead of helping them attain their wellbeing.

Some of the teachers interviewed by Radio 1 said that it was not clear how they would be required to pay 16% interest while the money come from their savings. They want the interest rate to be at least 5%.

“it is meant to worry about how we can be forced to pay such an amount of interest rate which is higher and it is from our savings.” One teacher said.

He added that Umwalimu Sacco cooperative has been set up to help teachers get loans easily so that they manage to thrive, but the high interest rate on loans does not allow them to move forward.

“Umwalimu Sacco was initiated as a response to promote the development of the teacher, but this interest rate cannot motivate our progress.”

Another teacher said that due to the teacher’s living conditions and his salary, taking the big amount of benefits from his/her pay would be a reversal rather than a promotion.

“You know the current life of a teacher, look at his salary, when he takes this loan and goes to get paid he/she ends up by getting only Rwf5,000, just a little money. They should reduce this interest rate to at least 5% otherwise we would go backwards instead of going forward,” he said.

Although the teachers say that the loan they are given is from their savings, the management of the cooperative says that what these teachers think is wrong.

Laurence Uwambaje, Director General of Umwalimu SACCO said the teachers do not understand how the loan is normally disbursed.

“The loans we give them is not their money back, because their savings were given to them in loan and were finished, we found it necessary to inject in the government’s fund and it was over, then we decided to let the annual income of the cooperative on the account to increase its capacity,” she said.

She added that the reason for the increase in interest was that teachers’ savings had finished and the cooperative uses the money from elsewhere.

“The interest we request them depends on the amount of money we spend on it plus different benefits that come with it, the combination of that gives us a way of charging the interest rate on teachers’ loans.”

 combined with what makes you profit,” he said.

Teachers do not agree with the statement of Umwalimu SACCO Director General because they used to pay 16 percent interest rate since a couple of years back.