Two local banks are set to benefit from a Rwf5.3 billion loan to finance export-oriented small- and medium-size enterprises (SMEs) under the Export Growth Fund.

The loan agreement was signed between Development Bank of Rwanda (BRD) and two of the leading partner financial institutions, I&M Bank and Banque Populaire du Rwanda (BPR), yesterday.

The initiative is in the framework of the Rwandan-German Development Cooperation, the Government of Rwanda through the Ministry of Finance and Economic Planning and BRD, as well as the German Development Bank (KfW).

The latter entered a financing and project Agreement to provide loans to financial institutions for on-lending to export-oriented SME’s in Rwanda.

Another part of the credit line, worth Rwf2.2 billion, is dedicated to capacity building to support the implementation of the project.

Speaking during the signing ceremony, BRD chief executive Alex Kanyankole explained that KfW extended the credit line to provide sustainable and tailored financial services for Rwandan small- and medium-size enterprises that have been undeserved due to high cost of finance and also those focusing on the expansion of their business with the overall target to enter (new) export markets.

He said interested SMEs now have an opportunity to access funds at low interest.

“We are happy to reach another milestone of concluding agreements with I&M Bank and BPR who are going to avail financing opportunities to our SMEs in the export sector. This collaboration is set to continue and we commit to dedicating our energy to increase finance in this sector,” said Kanyankole.

The German contribution is destined to support the Government’s already existing initiative, the Export Growth Fund, which was established by the Ministry of Trade, Industry and East African Community Affairs.

The project, being implemented by BRD, aims to broaden and deepen the range of products and services offered by financial institutions to SMEs with export potential or those which are already active in the export sector, and encounter limited access to export-related funding.

I&M Bank managing director Robin C. Bairstow and Banque Populaire du Rwanda (BPR) acting managing director Sanjeev Anand, expressed their delight at being parties to the agreement.

“We already have a good list of potential customers who qualify to benefit from this scheme hence we are glad to be part of it. The signing refines the parameters of our operations,” said Bairstow.

According to Eric Rutabana, head of corporate and business banking at BPR, a subsidiary of the Atlas Mara Group, the support will benefit all the SMEs that face challenges of accessing finance in banks to develop their products for export.

Targeted SMEs are categorised in agriculture and livestock, horticulture and floriculture, minerals, coffee and tea, among others.

“We are excited to sign this agreement because SMEs are the backbone of our economy. We will use this facility as much as possible and as fast as possible and we look forward to continued cordial working relations with BRD,” said Sanjeev.

Challenges for banks before

Faustin Byishimo, head of commercial banking in I&M Bank, said the bank currently offers short-term loans to SMEs.

“The main challenge we had is that we could not get money for long-term loans, it was limited to one year but we hope to get money that can see clients get long-term loans of up to nine years,” said Byishimo.

According to BRD, the SMEs should have accreditation and have rights to do business and have basic practices in line of export-oriented market.

Beneficiaries should also be able to demonstrate how their projects are beneficial.

BRD’s financial development objectives are focused on six key priority sectors that are key drivers of the economy; exports, agriculture, energy, affordable housing, education and special projects.