Kigali: Steven in United States sends $200 dollars every month to his brothers in Kigali but he pays up to 20% to have that money moved. In addition, whenever he makes the transfer, he has to call his siblings to inform them – culminating into another cost. well, that is going to change completely - thanks to a new system installed in Kigali, RNA reports.
Such is the ordeal that Steven and tens of thousands of Rwandans in the diaspora have to face just to support their families. However, a new system that a local workers’ cooperative bank has installed threatens to end the monopoly the money-transfer giants have had for decades.
The Union of Workers’ Cooperatives or UCT bank is partnering with a Dutch foundation AUXFAM with expertise in helping micro finance institutions to establish a money-transfer system that may see some 50,000 Rwandans in Europe and North America sending money back at virtually no cost.
The project started with the request of the Rwandan Diaspora in Belgium and The Netherlands – who are in considerable numbers.
All that somebody needs, according to Mr Cornelis Heesbeen – brain behind the project, is to be a member subscribed onto an international system called Universal Methods of Value Access on the internet or UMVA.
For membership with UMVA, Mr Heesbeen says, people seeking to transfer money just ‘pay a small fee’ for administrative expenses. The receiving party would have to go to the nearest UCT branch with the installed system and they will have the money in ‘not more than five minutes’.
Incidentally, the software name ‘UMVA’ which is operating in Rwanda alone on the African continent, means ‘listen’ in Kinyarwanda. Access into the Dutch-based UMVA servers is done through the internet.
With the understanding that very few people can actually use the internet – later-alone computers, UCT and AUXFAM are pioneering a program to train all the 90,000 members of the cooperative Bank – who are largely low income earners, with basic computer skills including using the UMVA system.
“Ultimately as commercial banks are targeting serving just 10 percent of the population, we are looking at the other majority”, says Mr Heesbeen, in reference to the higher-earning portion of people who actually are able to get their money transferred through the existing local banks.
Free calls to Europe and America
Just a few months in operation, the new system has four centres across the country having fully installed internet cafes with about 10 computers each where members of UCT bank surf at no cost, can make free calls to Europe and North America, in addition to free training.
Two centres are in Kigali, one in Rusizi in Western Rwanda and another in Rubavu – Northern Province. AUXFAM is currently soliciting funding from international agencies and individuals, coupled with close-engagement with the Rwandan government, to have at least 25 centres countrywide. Rwanda has 30 districts – meaning each locality would be covered.
Mr Heesbeen says he is working with the Rwanda Information Technology Agency – RITA – to have the remote hill communities around the country linked by Tele-centres, also given required materials to facilitate money transfers.
Each centre is installed with an internet-phone system that costs about $75 from which UCT bank members with families in Europe and North America can make free calls. The phones are coded to telecom companies in the west by which it would be like the caller is there – essentially by-passing any roaming fees.
With centres close to the door-steps of communities, the Dutch expert says rural people will be getting even small amounts of as low as 5000 Rwandan francs from the families in urban areas as well around Rwanda. Some of the transfer agencies do not accept less than $100, and others consider aspects such as distance for which they may not transfer less than $200.
“To reduce the cost of transfer money home to Rwanda, the total amount sent is around 300 million (Francs), and 25% of that amount is cost of transfer and communication, we reduce that to around 3%”, explains Mr Heesbeen.
The project intends to connect 150.000 people in Rwanda, 50.000 in the Diaspora and 100.000 migrant workers, according to the plan available.
The same centre will have UTC bank pay-counters acting as the money-holding party attached next to the UMVA connected cafe where a client would have to get a note showing they have money to withdraw from the bank front counter.
In demonstration of how the UMVA system works, Mr Heesbeen says a rice farmer in the southern province will also have their produce transacted through the same platform without the seller meeting the buyer.
Disappointment
The UMVA banking system will also help government track amounts of money that the diaspora is injecting into the country – which remains a challenge for the low developed countries. The Central Bank announced for the first time last month that Rwanda’s diaspora had brought into the economy some $80million in the past year.
However, not all is going as planned. The revolutionised banking system should have been fully operational - boasting a wider outreach by now, but government has fallen short of its promise that there would be a broadband rollout nationwide completed by end of 2007.
AUXFAM conducted a survey in 2006 covering Burundi, DR Congo, Nigeria, Morocco for the money transfer project but reports that because the whole program was dependant on broadband accessibility, only Rwanda qualified.
“That is how Rwanda was selected for the implementation of the project in Africa”, says Mr Heesbeen, adding that, “government promised that the broadband infrastructure would be up by end of 2007 but we are a little disappointed”.
Rwanda is already laying the national backbone cable at some $49m envisaged to link all the 30 districts by December 2009.
After completion, the cable being laid by MTN means the country will tap from SEACOM’s 1.2Tb bandwidth capacity or the initial capacity of 640Mb from the EASSy regional projects. (End)
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