Recent amendments to the law governing deposit-taking microfinance institutions provide a legal framework for the organization and operation of tontines (Ibimina), which are collective saving and lending groups. A Ministerial order outlining the operation of tontines was published last week. Here are the key points:

Purpose: The Government recognizes the role of tontines in the social and economic transformation of Rwandans.

Definition: A tontine is a scheme where a group of individuals contribute money to create collective savings and lend to one another based on mutually agreed terms.

Establishment Requirements: A tontine must consist of at least five members and have a unique name that does not resemble that of any other registered tontine in the sector.

Governing Principles: Tontines operate on principles of free entry and exit, a common purpose, varying contribution levels, and equal rights in decision-making.

Financial Sources: Funding for tontines can come from member contributions, donations, loans from financial institutions, net operational income, and other legally recognized sources.

Financial Uses: Tontines may lend to members and engage in investments with approval from the general assembly.

Member Rights: Members have the right to participate in activities, access information about the tontine’s operations and funds.

Member Obligations: Members must pay contributions, repay loans and interest, and attend meetings.

Membership Loss: Membership may be lost through withdrawal, expulsion, or death.

Registration Requirements: Tontines must register with the local sector administration where they operate.

Legal Personality: Upon registration, a tontine acquires legal personality at no cost. Registration can be done online or by submitting required documents.

Sector Administration Responsibilities:  The sector administration provides support and guidance to tontines and ensures compliance with rules.

Promotion and Regulation: MINECOFIN oversees the promotion and regulation of tontines.

Accounting Records:Tontines must maintain records of cash flows, account statements, loan portfolios, and other financial activities.

Internal Controls: Necessary controls must ensure that the initiator, verifier, and approver of transactions are different individuals.

Bank Accounts: Tontines can open accounts in any financial institution, with signatories elected according to their rules.

Rules of Procedure: The rules should include the tontine's name, purpose, and membership requirements.

Dissolution: A tontine can be dissolved with general assembly approval, leading to cooperation with sector administration in the process and loss of registration certification.

For more information, read the Ministerial Order here.