Business development Fund-BDF has committed of Rwf 13.1 billion in form of guarantees to support profitable businesses without collateral to access credit from financial Institutions.
The guarantee funds have been given out to about 436 approved loans submitted through different financial institutions which included banks, microfinance Institutions, and Saccos stimulating over Rwf 35 billion worth of loans in the financial sector.
BDF was established last year by government with the aim of increasing business and employment opportunities for Rwandans provide to guarantee and facilitate them access capital without a need for collaterals.
"There is more interest coming from SMEs, people are now willing to take on credit because they believe there is a solid institution behind them to provide support," Innocent Bulindi Chief Executive
Officer BDF said during celebrations of 1st anniversary of the Fund.
Bulindi says that Rwf9 billion guarantee funds were given out to projects related to agriculture while close to Rwf 4 billion of funds were distributed to projects in other sectors.
"This is very encouraging and there is more interest coming from SMEs which shows a better way for the growth of private sector," he noted
The fund works with financial Institutions to provide guarantee funds to projects after banks assessing their viability and profitability.
He assured that the fund is providing guarantee to projects that will prosper and not fail. He is optimistic that projects financed will be a success and create an impact in the Rwandan community.
BDF also provides liquidity to Umerenge SACCOs to address the liquidity challenges limiting loan access for small and medium businesses mainly in rural communities.
Bulindi says that through Saccos financing facility, "we are providing additional liquidity to saccos at a subsidised rate to address the challenge of high interest rates".
Saccos financing facility is expected to bring down interest rates among Saccos thus attracting the SMEs to borrow.
"I think going forward probably BDF will have a more independent standing to be able to function as an independent credit enhancement agency," said Jeffrey Lee, Managing Director, Urwego Opportunity Bank.
Lee believes that the fund will help banks to minimise risks in lending to small and medium enterprises thus increasing its lending to the private sector needed to boost the economy.
"The private sector is developing especially in the SMEs sector, I believe this fund will help these businesses to grow and increase employment mainly for the youth," Minister of Youth and ICT Jean Philibert Nsengimana said
The Minister is optimistic that the fund will help boost SMEs which have been neglected by lending institutions due the inability to raise collateral.