Rwanda: SMEs to Benefit From Bank of Kigali's Rwf18 Billion Credit Line

The Director General of the French Development Agency (AFD), Remy Rioux, addresses the media during a meeting with State Minister for Economic Planning Claudine Uwera, in Kigali.

Bank of Kigali yesterday signed a credit line a $20m credit line with the French Development Agency, which is expected to go to lending sectors, including ICT, renewable energy and agribusiness.

The credit line, with an eight-year maturity, was signed yesterday by the bank's chief executive Diane Karusisi and the visiting AFD Group Managing Director Remy Rioux.

The credit line improves Bank of Kigali's position to extend credit to the private sector with estimates putting the likely number of SMEs to benefit at around 200.

The credit line, extended to BK at an interest rate of 6 per cent, was complemented by technical assistance agreement estimated at about Euro300,000 to increase the bank's capacity to review risks of projects as well as conduct appraisals for projects.

This is the second BK credit line this year after the bank secured another one of Rwf30bn from the European Investment Bank, the long-term lending institution of the European Union to support Small and Medium Enterprises (SMEs).

Bank of Kigali's definition of SME eligible to benefit from the credit line is firms that are borrowing sums of less than Rwf1 billion.

However, the latest credit line has a maximum lending cap of Rwf 500m per firm and will especially go to firms with less than 100 employees.

Karusisi said that the funds will go a long way in ensuring that there is access to finance to match the growing need for capital in a number of sectors as the economy grows further.

She said that it will also support Bank of Kigali's goals to lend to emerging enterprises while the technical expertise will go a long way in ensuring improved capacities in appraisal.

The bank's interest rates during lending will be dependent on the risk assessment of a project with rates ranging from 15 per cent to 17 per cent, she said.

At the moment, among the sectors with the highest demand for credit, according to Bank of Kigali, include trade, manufacturing, service, construction, hospitality and energy.

The credit line is considerably cheaper compared to loans that commercial banks access, because it is coming from a development finance institution.

While commercial lenders lend banks at a maturity of about three years only, development finance institutions have provisions to extend the periods to up to 8 years.

Rioux said they were keen on enabling the financier lend to SMEs as an intervention to low finance among SMEs and especially ICT firms.

He noted that, for instance, only 20 per cent of SMEs in Africa have access to finance while 90 per cent of start-ups have no access to financing.

The credit line to Bank of Kigali is part of a $2.5 billion kitty for the period between 2018-2022 disbursed as loans, guarantees and equity.

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