According to the Rwandan Ministry of Trade and Industry, 98 percent of businesses are considered SMEs, contributing 41 percent of all private sector jobs in the nation. There are over 72,000 MSMEs operating in Rwanda.
It is no doubt that a vibrant SME sector is a vital ingredient for a healthy market. However, due to challenges such as financial constraints, their contribution is sometimes below its potential. But given sufficient support more so financially, SMEs can thrive and boost economic growth.
In an initiative that is set to benefit SMEs, Bank of Kigali (BK Group Plc) has signed a deal with the French Development Agency (AFD) for a credit line worth USD 20 Mn. The deal was signed recently by BK CEO Dr. Diane Karusisi and AFD Group CEO, Rémy Rioux.
The finances will be channeled to fund small and medium enterprises in agro business, ICT and renewable energy sectors.
“I wanted to personally come here (Kigali), and not send our Africa regional representative, to witness this signing which we started talking about eight years ago,” Rémy said.
Rémy said that the reason they focused in Rwanda and not any other African country is their progressive economy. “There is no better place to do this than Kigali. We will deploy more financing capacity and that is a lot of work ahead of us.”
A Grant Agreement of USD 338K comprising of expertise capacity support in SME credit assessment will also be implemented with the AFD credit lines. The credit line has a maximum lending cap of USD 550K per firm and will especially go to firms with less than 100 employees.
“Clients’ demand for loans is too high and yet we are not having enough local savings to meet the demand. We will keep borrowing more to meet this demand but make sure that our interest rates are affordable,” Karusisi said.
“Every business is welcome provided they can meet the requirements. The interest rates will vary depending on our risk assessment of their business,” Karusisi said adding that “this flexibility is because we also got a flexible credit repayable in eight years”.
According to Bank of Kigali, the sectors with the highest demand for credit at the moment include trade, manufacturing, service, construction, hospitality and energy.
Featured Image Courtesy: Matador Network