Human capital management in rwanda: challenges and prospects for microfinance institutions

4.4. EXISTENCE OF EXTERNAL FACTORS

External factors affecting any organization may be summarized as political, economic, legal / regulatory and technological. For the case of microfinance in Rwanda, the following are external forces influencing their performance.

The government of Rwanda shows a good political will to support microfinance institutions. This responsibility is entrusted with the National Bank of Rwanda. Above all, the Microfinance policy is in place to guide institutions in this sector.

¹⁷ Question 13

Worthy of note is that according to Rwanda Revenue Authority, «companies that carry out micro finance activities approved by competent authorities pay corporate income tax at the rate of zero percent (0%) for a period of five (5) years from the time of the approval of the activity» ( http://www.rra.gov.rw/rra_article280.html).

However, when it comes to MFIs human resources management, the central bank has little influence. The job of the central bank is twofold:

First of all, «It is possible to see people who have been managers of financial institutions before and were involved in the office misuse. When they come to apply for a job in MFIs, MFIs do not know, only NBR knows. Candidates undergo a placement series of tests and then the employing institution sends a list of candidates to NBR to seek the opinion. Briefly, the job of the NBR is only to check with their past integrity where possible¹⁸»;

Secondly, «In case the MFI is recruiting the Director, the job is to see whether a candidate's academic background matches the job requirements. For example, they will show objection if there is an educationalist warming up for the MD's job¹⁹».

Interestingly, the NBR, in a bid not to «destroy» MFIs, «cannot hire an employee with a running contract from a microfinance institution²⁰».

The microfinance sector in Rwanda faces challenges to do with recruiting of skillful employees. The nature of the job in this sector is tough. According to one manager interviewed «managing a micro finance more challenging than managing a commercial bank. The job in MFIs is tougher than in commercial banks. Unfortunately, MFIs' pay is not competitive, that is the reason why majority of recruits are fresh graduates who are seriously looking for their first job²¹».

In the same line of argument, «a teller in MFIs suffers like a teller in a commercial bank. Their job involves paying customers, and receiving clients' deposits. May be with a difference in

18 Interview with officer in charge of microfinance supervision, National Bank of Rwanda

¹⁹ Ibid pp 89

²⁰ Interview with anonymous manager at DUTERIMBERE IMF SA

²¹ Anonymous manager from UNGUKA

volumes of money and numbers of clients but sitting waiting for a customer is more painful than being busy»²².

In other words, in the labor market, MFIs compete with commercial banks most especially when they are new and need people with some banking experience. MFI employees are an easy target after all employees feel motivated even when salaries are not good as compared with other commercial banks yet superior to microfinance rates.

Ergonomics are not very good. «We have poor infrastructure. Facilities are not the best, offices, ventilation, chairs, computers are fairly available²³».

MFIs depend on donors / partners for training. Reported partners in this endeavor include CGAP, AQUADEV, TROCAIRE, TERAFINA and AMIR. This means «their capacity to develop their employees largely depends on outsiders, which carries a lot of uncertainties. Worthy of note is that there are no enough certified trainers of trainers in microfinance sector. When training is to take place, AMIR has to arrange with CGAP. Drawing from experience, however, many MFIs do not take it as a matter of priority to send employees for these AMIR - CGAP organized training. Their perception is that training is costly in terms of how much money they have to pay²⁴».