Rwanda: Closed MFIs - Garsec Seeks BNR Cash

Mar 2007
Kigali, March, 16 2007 - Garsec, a local private security firm, has petitioned the National Bank of Rwanda (BNR) over Frw190 million that the bank owes the firm. The firm, owned by several retired army officers, is said to have provided guards to protect the now-closed Micro Finance Institutions (MFIs), but is yet to be several months after the financial institutions' closure.

After the financial institutions' closure. Garsec says that it carried its security duties well but that BNR has failed to pay the company for services rendered to it. "The company is in financial crisis which was brought by the closure of micro-finance institutions. We used a lot of money which was not paid and we want the Central Bank to solve our issue," Francis Kayigema, the company director said in a telephone interview on Monday.

He said that Garsec was guarding all branches of Gisubizo and Gwiza micro-finance institutions countrywide. "We were providing more than 200 guards per day, and we used our own money to pay them." According to the contracts seen by The New Times, Garsec was supposed to provide two day guards and two night guards for every branch, all with arms.

However, BNR governor, François Kanimba (pictured) said that Garsec may not get the entire amount they are claiming for, but if they produce the contracts, they will be paid some amount of money. "Government agreed to pay the depositors only 50 percent. For other cases like landlords and people who rendered services to the bank like Garsec, there is a committee of liquidators that were appointed by the court which is studying their files. The liquidator is following it," he explained.

In an effort to enforce Rwanda's law regarding microfinance institutions, BNR last year closed down eight Micro-Finance Institutions (MFIs) over alleged gross mismanagement of funds and significant losses incurred due to poor credit management practices. Thousands of clients and several MFI partners were also affected by the closure.


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