The German Development Bank (KfW) has partnered with the Development Bank of Rwanda (BRD) to promote Rwandan exports through a €8.5 million (about Rwf7.5 billion) financing facility at the Export Growth Facility (EGF).
Speaking at the signing event in Kigali in November, Minister of Finance and Economic Planning Claver Gatete said the funding will deepen the range of services offered by financial institutions to SMEs with export potential, or those already active in the sector. Gatete said the fund will help increase and diversify Rwanda's exports and thus reduce the country's trade deficit.
EGF, which was established by the Ministry of Trade, Industry and East African Community Affairs (MINEACOM), is implemented by BRD and seeks to address the lack of funds to boost exports. It consists of three different components: the matching grant fund, the export guarantee facility, and the investment catalyst fund. KfW's support will focus on the funding component, according to the officials.
BRD CEO Alex Kanyankole said the funding will facilitate SME firms in horticulture, agro-processing, artisanal mining and manufacturing.
"We want SMEs in these sectors to access enough funding to improve and expand their operations, and to become more innovative to boost their productivity, product quality and export volumes," Kanyankole said.
He added that the facility is part of efforts by BRD to revitalize small export-oriented businesses to help boost competitiveness of the country's products. Kanyankole said the money will be accessed in the form of working and investment capital through selected partner financial institutions, both commercial and microfinance banks.
"BRD will provide loans of about €6 million (about Rwf5.3 billion) to financial institutions for lending to export-oriented SMEs in Rwanda, as well as €2.5 million (about Rwf2.2 billion) for capacity building to support the implementation of the project," he remarked.
Local producers and exporters will be able to access the funds at an annual interest rate of less than 10%. According to Markus Bar, the director of KfW Rwanda, the international lender supports BRD to ensure sustainable and tailored financial support for local SMEs to help them to expand their businesses and boost their capacity to enter new export markets.