The government, the Development Bank of Rwanda (BRD), and Germany Development Bank (KfW) have launched a €8.5 million (about Rwf7.5 billion) Export Growth Facility to support export-oriented firms.
The funding, from the Germany government, is part of the Rwandan-German Development Co-operation small-and-medium-enterprises (SMEs).
Speaking at the launch event in Kigali on Monday, the minister said the project will ease access to export-related funding and aims to broaden and deepen the range of products and services offered by financial institutions to SMEs with export potential, or those that are already active in the export sector. Gatete said the fund will help grow and diversify Rwanda’s exports and thus reduce the country’s trade deficit.
The Export Growth Fund, which was established by the Ministry of Trade, Industry and East African Community Affairs, is implemented by BRD and seeks to address the challenge of lack of funds to boost export trade. According to Alex Kanyankole, the BRD chief executive officer, 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, as well as become more innovative to boost their productivity and hence enhance product quality and export volumes,” Kanyankole said at the launch of the facility.
He added that the facility is part of efforts by BRD to re-energise small export-oriented businesses to help boost competitiveness of the country’s products. Kanyankole said the money will be accessed in 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 on-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 added. Local producers and exporters will be able to access the funds at less than 10 per cent interest rate.
Export Growth Facility 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 officials.
According to Markus Bar, the director of the KfW Kigali office, the international lender supports BRD to ensure sustainable and tailored financial support for local SMEs to facilitate them to expand their businesses and boost their capacity to enter new export markets.