Attracted by promises of exorbitant monthly interest rates, thousands of savers have invested their savings in institutions now accused of dubious practices. The losses, estimated at several billion FBU, have left families destitute, with no clear recourse or guarantee of restitution.
They promised monthly returns that defied all competition. These microfinance institutions dazzled their clients with interest rates of up to 60% per year, deposits multiplied in a few months, and prosperity accessible to all. But behind these dazzling promises, thousands of Burundians saw their savings evaporate. ‘We had invested 25 million FBU over two years ago. That’s also the amount we lost, including interest,’ regrets a 37-year-old woman living in the urban area of Ngagara, in the province of Bujumbura.
This investment, meant to ensure her family’s stability, she grumbles, turned into a nightmare. The contract she had signed with the microfinance Ineza Iwacu (formerly Coopdi) granted her the right to monthly interest of 5%. ‘I had put all my savings into this offer, hoping that one day, I would reap the maximum benefits to renovate the family home, to free myself from the burden of rent,’ she confides bitterly.
Unfortunately, unaware of the trap closing in on her, this woman, who requested anonymity, saw her dream dissipate little by little: ‘After my husband’s employment contract ended, the family was left without income, with capital locked up and debts accumulating.’
Today, only this woman has a job, and her income is not enough to cover the family’s essential needs. The dream of a profitable investment has turned into deep financial instability. ‘I went to the headquarters of this institution to retrieve my money, but without success. I even sent several letters to the CEO of this microfinance, without any response. My recourse to the judicial authorities remains ineffective,’ she laments.
Suspicions of Organized Theft
Another 35-year-old man living in the Cibitoke neighborhood reveals that he suffered the same fate: ‘I had invested 9.6 million FBU with RCF Nyunganira, pending my trip.’ However, he explains, this amount from a salary loan was supposed to be kept safe. But the microfinance never paid the promised interest or returned the capital. ‘We never thought we would be scammed because it’s a microfinance that displays a sign outside indicating it is approved by the Central Bank,’ he points out. Inside this institution, there is a note showing this approval. Another thing that inspired my confidence was the contract I signed with 2 copies, one for me and the other for the institution, also signed by officials, with a mention that they received nine million six hundred thousand Burundian francs on December 5, 2024, for my case, and that on the same date each month, interest would be paid into the account. Which was never the case.’
The height of misfortune, he laments, every month, a portion of his salary is deducted to repay the loan, while the funds remain inaccessible. ‘My travel project fell through, and daily life has become a battle against debt since January 2025.’
Inadequate Institutional Response
Faced with the increasing cases of fraud and embezzlement in some microfinance institutions, the Central Bank of Burundi (BRB) has reacted. According to Simplice Nsabiyumva, Director of Supervision and Financial Stability, the BRB is working to recover embezzled funds, especially in community financial groups classified in the fourth category.
However, he acknowledges that full reimbursements are rare because total fund recovery remains challenging. During a press conference held on October 20, 2025, Mr. Nsabiyumva recalled the classification of microfinance institutions into four categories, including joint-stock companies and funds (1st and 2nd categories), both subject to a minimum capital of one billion FBU, but only joint-stock companies can receive deposits and grant loans. On the other hand, cooperatives (3rd category), based on solidarity, have a threshold of 500 million FBU and perform the same functions. And finally, community financial groups (4th category), informal and unsecured, limited to collecting contributions.
This framework from the BRB states that only institutions in the 1st and 3rd categories are authorized to receive deposits and grant loans. ‘The others can only collect contributions from their members. However, it is often the 4th category groups that promise unrealistic monthly interest rates, up to 8%, nearly 96% per year, well above the legal rate of 7% annually. I call these people thieves,’ he exclaimed.
Furthermore, he explains, institutions in the 1st and 2nd categories must deposit a capital of 1 billion FBU. Those in the 3rd category, 500 million FBU. For the 4th category, the fixed capital has not yet been determined. ‘In addition, the resolution and guarantee fund, which is being established, provides for an initial refund of 3 million FBU in case of bankruptcy. However, 4th category groups are not covered by this mechanism,’ he adds.
Massive Losses and Inadequate Vigilance
Today, the country has 88 microfinance institutions, 15 banks, and over 136 community financial groups, with more than 30 involved in fraudulent practices, according to data provided by the BRB. Cumulative losses exceed 10 billion FBU. Some families, ruined, are struggling to make ends meet and do not know where to turn.
Another major problem is the lack of a guarantee fund for savers. Contrary to what some managers of these microfinance institutions claim, no funds are deposited with the BRB to cover losses in case of bankruptcy. Asked about the reasons for the BRB’s inaction in the face of these abuses, the Director of Supervision and Financial Stability at the BRB admitted that some auditors, responsible for monitoring these institutions, were complicit, providing false figures. A revelation that shocked the audience.
Something Fishy Going On
According to Faustin Ndikumana, national director of Parcem, any activity of a company or entity that aims to collect public savings and grant credit to the public must require authorization from the Central Bank because these microfinance activities interfere with monetary policy, and they must be controlled by the Central Bank. ‘This is to prevent inflationary effects related to uncontrolled money creation that could result from these microfinance credit activities. So, the Central Bank normally has mechanisms to control these credit institutions,’ he points out.
Mr. Ndikumana emphasizes that the Central Bank must monitor the equity ratios to see if a microfinance company has enough equity to carry out these activities. ‘Like other financial institutions, there are what we call ratios. Especially at the start-up capital, it must be verified that if this capital has been fully paid up. Because there are always cases where the founders of these microfinance companies only use the public’s money without releasing their own capital,’ he adds.
He further explains that the cash ratio to check the cash flow of these companies, in relation to expenses and demands for credit or withdrawal, and the solvency ratio must also be controlled and monitored by the BRB to see if there are no overdue, disputed, or contentious receivables.
Moreover, this civil society activist insists, there is also a mandatory reserve threshold imposed on commercial banks by the BRB. ‘So, I believe that the Central Bank should not absolve itself and say that if there are cases of cheating, it is not its concern. The Central Bank must have oversight, control, and surveillance through these mechanisms,’ he clarifies.
He concludes that the Central Bank could even invent other innovative mechanisms to truly regulate the operations of these financial institutions, particularly microfinance.