Young entrepreneurs aged 18 to 30 will soon be able to access loans from a new youth fund at an interest rate of 9 per cent, according to the Ministry of Youth and Arts.

The fund will be implemented by the Ministry in partnership with the Development Bank of Rwanda (BRD).

Solange Tetero, the Director General of Youth Empowerment at the Ministry of Youth and Arts, said Rwf1.5 billion has so far been invested in the fund.

"But it will keep growing as the Ministry keeps mobilizing more resources,” she said.

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Both youth and artists will access loans by providing collateral equivalent to 10% of the loan value.

"The collateral will be either assets or cash, at the discretion of financial institutions,” she said.

Borrowers who repay their loans properly will also receive a grant equivalent to 10% of the loan amount upon full and timely repayment.

Loan repayment begins three months after disbursement, with the repayment period ranging from six months to five years.

Youth and artists who wish to benefit from this fund must meet several requirements, including being between 18 and 30 years of age. However, the age requirement won’t apply to artists.

Applicants must also have an existing, viable business, and the business must be tax-compliant or at least possess a Tax Identification Number (TIN) and a trading licence.

In addition, applicants must have held an account with a financial institution for at least one year.

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After meeting these conditions, applicants are required to submit a business proposal outlining the current status of the project, its profitability, and its growth prospects.

However, youth and artists have also been informed that the loan amount applied for must not exceed Rwf10 million.

Applicants must also submit a repayment plan and demonstrate that they already collaborate with institutions that provide business training.

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A revolving fund

According to the ministry, the fund will operate as a revolving facility, with the number of beneficiaries determined by the resources mobilised over time.

"The number will therefore depend on the resources mobilized, the funds recovered and the number of entrepreneurs who are interested. However, in this first batch, 400 entrepreneurs are targeted,” Tetero explained.

According to the 2022 Rwanda Population and Housing Census, young people aged 18 to 30 make up 27% of the country’s population. However, many still face difficulties accessing the financing needed to start their own businesses.

The new fund is part of the government’s efforts to ease these funding constraints and support young people seeking to launch new ventures.

Jackson Kwikiriza, Executive Director of the Association of Microfinance Institutions in Rwanda (AMIR), welcomed the fund, saying it would improve access to finance for young people with viable business projects. However, he noted that collateral requirements must also be addressed to ensure the fund benefits those who need it most.

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"With 90% of the required collateral guaranteed and loans offered at a relatively low interest rate of 9%, the fund could ease access to finance. However, the remaining 10% collateral requirement should also be addressed, as it may still lock out some young people who cannot afford it,” he said.

The 10% collateral required to access the financing, he noted, can be obtained by grouping youth and artists into cooperatives to ensure mutual or solidarity guarantees.

"They can also start saving to build up cash collateral. That cash can form part of the collateral,” he added, suggesting that the move will accelerate financial inclusion and job creation among the youth.

Financial inclusion among youth in Rwanda increased from 88% in 2020 to 94% in 2024, according to the Finscope 2024 Youth Financial Inclusion Thematic Report by Access to Finance Rwanda (AFR).

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"Young people must now be ready to tap into this opportunity. Financial institutions must be prepared to profile youth by age and business category, identifying sectors such as hospitality, services, agribusiness, tourism, eco-commerce, small businesses and others,” he noted.

Kwikiriza highlighted that the financing scheme should identify both youth who already have small businesses and those who are still unemployed for financial support.

Youth speak out

Dieudonnee Niyodushimana, an agribusiness entrepreneur, said: "These loans are a positive contribution to young entrepreneurs and artists. They will help those who are already operating but have reached a point where their capacity to expand is limited.”

He also called for increased funding, saying youth programmes often fall short when beneficiaries receive less financing than their projects require.

"Another common mistake in youth programmes is when someone presents a project worth Rwf10 million, but ends up receiving only Rwf3 million or Rwf5 million,” he added.

Esther Itangishaka, a young entrepreneur who makes shoes in Gisagara District, said that all requirements for youth to access finance should be defined in a single file to fast-track the application process.

"You might spend months looking for documents one after another because they were not outlined in a single file,” she said, calling on the ministry to consider young entrepreneurs operating in remote areas.

"SACCOs must be included in channelling such loans to youth in remote and rural areas,” she said.

Itangishaka currently produces 500 pairs of shoes per month. "I need 10 workers who can produce 100 pairs of shoes per day. This requires financing.”