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BRD records healthy investments in 2013



As a bank mandated to foster national development byavailing the necessary finance to see developmental projects take off, the Development Bank of Rwanda access to finance in the area and ensuring that the funds given out yield the expected results.

In 2013 particularly, BRD registered investment lend- ing exceeding its annual projections while at the same time reinforcing follow up on the already existing projects. This ensured an improvement in loan repayments throughout the year hence making finances for new projects in the pipeline available.

Despite having a keen interest in financing large developmental projects, BRD’s investments are seen to span the entire economy, identifying itself as the national leader in financing Small and Medium Enterprises (SMEs). This is done through partnerships with such institutions like the Business Development Fund (BDF) which offers guarantee to those projects without collateral hence enabling the same to access finance in circumstances that would otherwise be impossible to.

Another area through which the development bank’s finances trickle down to reach Rwanda’s smallest companies is through the Microfinance Institutions (MFIs) refinancing product. In refinancing, the bank makes funds available to mostly Umurenge and special group’s Savings and Credit Cooperatives (SACCO) like Umwalimu SACCO to finance predetermined areas of development.

A glimpse at 2013 reveals that a big part of the approved financing was directed into – commercial and tourism, industries and services, agriculture sectors – and particularly real estate development to boost the growth of the sector and in so doing help address Rwanda’s gap in affordable housing for her population.
However with interests in furthering the cause of increasing the supply of housing in Rwanda, BRD plans to kick off soon with its affordable housing real estate when all the resources are ready for use. To offer more insight into the bank’s development agenda and other areas of interest to Rwanda’s only development lender, Manzi Benjamin BRD’s director of Investments underscored the importance of a development bank vis-à-vis other financers stressing that, “we are mandated to steer national development hence our focus is always on those projects that have the potential to improve the livelihoods of many. That is why we engage in long term financing mostly and of big projects exceeding financial needs of Rwf 15 million.”

Vividly, development projects according to BRD are those that add value to locally existing or imported raw materials, provide employment for Rwandans as well as create wealth by using imported technology as a tool to enhance knowledge and experience for Rwandans.

Priority sectors to BRD

BRD’s financing objectives largely focus on almost all sectors of the Rwandan economy such as Agriculture and Livestock, Manufacturing (Including Agro- Industries), Commercial & Hotels, Mining, Water and Energy, Mortgage and Real Estate, Socio Infrastructures (education and health) as well as Refinancing of MFIs. Agriculture is given considerable priority owing to the fact that it employs majority of the Rwandan population and contributes about 40 per cent to Rwanda’s Gross Domestic Product (GDP).

The bank’s financing therefore encourages commercial farming rather than subsistence farming which has also led to creation of raw materials for agro-related industries.  Also in the industries and services sector, the development bank’s financing has boosted manufacturing and enhanced the increase in exports and in so doing enabling a great reduction on the number of imports.

“In supporting this sector, we are also contributing to better service delivery through tourism promotion to encourage high Foreign Direct Investments (FDIs) into the economy,” Manzi denoted.
Meanwhile, development of the micro finance institutions (MFIs) is a priority sector of intervention by BRD achieved through refinancing of their portfolios and rendering technical assistance to boost their entire operations. “Through refinancing MFIs, BRD’s outreach to SMEs is greatly achieved because of the nature of MFI operations and lending. Our partnership with MFIs increases access to finance to all of Rwandans” Manzi emphasizes.

In the water and energy sectors, BRD supports investments in green energy related projects to attain the country’s objectives aimed at increasing power supply needed for fast tracking development. “We have also prioritized the development of social infrastructures such as markets, schools and clinics through financing private sector investments in education and health areas to reduce over reliance on government expenditure in such investments,” Director Manzi noted.

2013 registered high investments, plans are in place to consolidate the achievements in subsequent years

Further showcasing the developmental role that BRD has on the economic growth of Rwanda, Mr. Manzi highlighted that 2013 experienced a remarkable performance with an impact that cannot be overemphasized. For instance, while BRD projected to approve over Rwf 45 billion in investments, the bank had rather endorsed Rwf 60 billion worth of investment loans to numerous projects across the country by end of year representing a 130 per cent increase.

The approved financing is projected to directly stir creation of at least 4,000 permanent jobs and 10,500 temporary jobs while also indirectly creating numerous more employment.Further portraying the impacts of the approved investments on Rwanda’s economic growth, BRD estimates that about Rwf 8.8 billion will be collected annually in taxes to the government arising from the projects the investments will create.

Precisely 41 percent of loans approved by Investment Department were in commercial buildings and hotels, followed by the manufacturing sector with 22 percent and agriculture took the third biggest share with 15 percent. “We were satisfied with our performance as we achieved many of our set targets and we have high hopes for this year as well,” Manzi shared.

Moving forward, Manzi reiterated that the bank’s focus is not going to change rather noting that the target is to avail more finance into the economy. “To be precise, our focus will be on affordable housing as well as ensuring SME development to achieve the set targets on achieving more jobs and reduce poverty through raising the standards of living as mandated by the Economic Development and Poverty Reduction Strategy phase II.”

Also according to Manzi, the investment department of BRD will focus on amplifying the refinancing system through which MFIs will be empowered to efficiently cater for prospective clients in need of small investment loans to facilitate SME growths especially targeting women and youth.

On the hand, the future of BRD and specifically the bank’s investment department will see a separation of the agriculture financing cluster with the intended outcome of improving agricultural financing.  The department will be charged with boosting financing, planning and follow-up of financed agriculture projects and in so doing ensuring that they are sustainable and contributing to the economy as intended

Who is eligible for loans from BRD?

According to Manzi, BRD is not limited in terms of who and how much they need as long as the projects in point fall under the bank’s priority sectors, meaning; as long as the projects will have a clear developmental impact on the Rwandan economy. To demystify that the bank’s financing is availed to all, Manzi said, “BRD just like any other financial institution is bound by the central bank regulations as per respecting the set requirements of a project promoter to access investment loans.”

For instance, among the requirements to be eligible for BRD short, medium or long term investment loans, one has to go through the individual identification procedures, possession of adequate technical capacity to manage the project, minimum participation of the project promoter (varying between 30% and 50% of the cost of investment according to the size of the project) and feasibility project study (technical and financial).

In addition, BRD requires certain loan securities depending on the project (though BRD also accepts guarantees provided by recognized guarantee funds such as BDF), and we also encourage the project owners to consider our unbeatable and negotiable interest rates and favorable long repayment plans depending on the total cost of the project as agreed upon.

Follow up on projects is a priority element

According to Manzi, 70 percent of the projects in which the development bank invests are startups a fact that raises concern on ensuring the sustainability of the ventures and on their abilities to deliver intended results of boosting national development. Popular knowledge dictates that startups are oftentimes challenged with numerous barriers that on many occasions end up chocking or at times strangling the young life out of the ventures.

Thus in efforts to ensure that the invested finances give intended results, BRD has put in place a finance monitoring policy that ensures the project to be invested into is detected prior to the investment, during the investment period and at the time of disbursement.

Also, the bank ensures effective use of the approved finances by limiting disbursement to activities; implying that finance to execute particular activities is released at a specific time. For instance, instead of disbursing an entire Rwf20million loan which was approved for a particular project all at once, BRD agrees with the borrower and come up with execution schedules indicating the amount of money required for particular activities and level of implementation until the last unit of the finance is released.

“This helps the borrower to ascertain that the acquired finance is only used in implementing the intended project for which it was approved. Also it enables the bank to continue offering guidance and monitoring to ensure that the project reaches the intended goal; of facilitating national development,” Manzi noted.

“We have a highly dedicated client relations team that is always at hand to provide all the detailed information on requirements to access our investment financing,” Manzi pointed out.  But unlike any other financers, BRD offers advisory services and capacity building to its clients (business promoters) faced with challenges of limited skills in terms of compiling their business ideas into bankable business plans and management skills during and after project implementation.

Also at the bank, one can also access extensive capacity building programs on the basic skills from our subsidiary companies such as BDF and BRD Insurance Brokerage (BIB) which deliver business development services and training on best business management practices. More so to note, all the supplementary support services can be accessed through Business Development Centres (BDCs) located in all sectors of the country financed by BDF.

“We also have branches in all provinces – Southern and Western (served by Nyanza), Northern (Musanze) and Eastern (Kayonza),” Manzi clarified. The presence in various areas across the country highlights BRD’s financing outreach which is not limited by geography. For instance majority (about 60 percent) of financed projects in 2013 were located in other provinces of the country with Kigali city representing only 40 percent of the entire financing.

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