Exporting firms in Rwanda have in the recent past faced challenges accessing financing from banks to support their businesses with many banks citing the businesses as too risky.
However, this will soon be history with the new Export Growth Facility (EGF) by the Development Bank of Rwanda (BRD) that will see Rwandan firms manufacture more products that are import-substituting and for export.
“This will enable production of a variety of quality products for import substitution and export,” said Benjamin Manzi, the Head of Export Financing at BRD during a meeting with the media at the bank’s head office.
He said the fund has principle objectives which include enabling Export oriented SMEs, that have an annual turn-over ranging between US$50,000 (Rwf 36 million) and US$ 1 million (Rwf 770 million), to access tailored export finance products and services.
He added that BRD will, in addition to providing finance, improve knowledge of SMEs on export related finance by offering them with technical assistance.
He also noted that the fund will operate under the following three facilities;
Investment Catalyst fund: to encourage private sector investments in exports through subsidized loans at 10% interest per annum. Previously, firms were getting loans at average short and long term interest rates that ranged from 17% to 19%.
Matching grant fund: to encourage penetration into external markets by offering financing of up to 50% of total project cost.
Export Guarantee facility: to enhance credit worthiness of exporters (majorly short term) by providing guarantees of up to 80% of value of project.
Rwanda’s external trade
According to Robert Opirah, the Director General in charge of Trade at the Ministry of Trade and Industry (MINICOM), there has been a general improvement of trade in terms of both imports and exports.
He however noted that imports continue to out-weigh exports, widening the country’s trade deficit to over Rwf 1.2 billion.
“This gap is continuously widening and something has to be done,” he noted.
He noted that the establishment of the Export Growth Facility will increase access to finance by Rwandan firms and reduce their interest expenses.
About the Export Guarantee Fund
The Export Growth Facility (EGF) was initiated by MINICOM as fulfilment of the 4th pillar of the National Export Strategy which calls for establishment of this specific fund to support exporters.
All funds mobilized by the Gov’t, BRD and other stakeholders shall be channeled to grow the EGF for financing of export oriented businesses.
EGF is managed by BRD which is both a participant and refinancer to other participating banks including ECOBANK, BPR, Urwego Opportunity Bank, and I&M Bank.
The EGF pilot scheme targets beneficiaries from the following sectors – horticulture, agro-processing and manufacturing, and artisanal mining.
