The International Finance Corporation (IFC), on Wednesday, signed a two-year $500,000 advisory deal with I&M Bank to expand access to finance for small and medium enterprises.The engagement follows IFC's $10 million subordinated loan to I&M Bank in May 2018 to strengthen the bank's capital base, and help it increase lending to small enterprise.
The advisory project is the first for IFC in Rwanda.
By promoting increased access to finance for underserved small and medium enterprises, I&M Bank says that they are seeking to support the Government's National Strategy for Transformation and the Vision 2050.
Robin Bairstow, Chief Executive Officer of I&M Bank, said that with the partnership, they are seeking to build banking products for small business customers to increase their reach in regards to SME growth.
Manuel Moses, IFC Country Manager, said that the choice of SME financing is due to its importance in job creation
"It's not just about making more finance available, it's about creating opportunities for small businesses to thrive," said Moses.
SMEs account for 98 per cent of all businesses in Rwanda, and contribute more than half of the country's total gross domestic product.
However, small businesses struggle to access finance, leading to an estimated $1.2 billion credit gap.
The advisory project will promote access to finance for SMEs, with a special focus on women-owned businesses.
Faustin Byishimo, Executive Director and Divisional Head for Business Development at I&M Bank, said that new strategy will also position the bank suitably for growth in coming years.
"The partnership with IFC is the start of a great journey towards positioning the bank as the SMEs go to financial institution for both their financing and other banking requirements," Byishimo said.
Riadh Naouar, Manager for Financial Institutions Group Advisory in the Middle East and Africa, noted that the initiative could help drive economic growth in Rwanda.
"When we work with partners to increase small business access to finance, we build strong businesses that can create jobs and drive economic growth," said Naouar.
Access to finance remains a leading constraint to SME growth in Sub-Saharan Africa, where 350 million new jobs will be needed in the next 20 years.