KIGALI - Rwanda Development Bank (BRD) has announced that it has so far approved loans worth Rwf55.2 million for a period between January to June 2010 for development projects.

The move is expected to boost overall economic growth. Government projects the economy to expand by at least 7 percent this year.

The development bank in which government is the biggest shareholder with over 60 percent shares aims at eradicating poverty especially in rural areas through investment in agriculture and other projects.

"Our target is to double this by the end of the year. We always issue credit in line with government’s development priorities,” Jack Kayonga the Managing Director told Business Times in an interview last week.

The financial institution, Kayonga said, has been investing in various sectors including education, energy, health, tourism and agriculture. The bank says it intends to grow its loan book this year to at least Rwf30 billion by the end of the year.

"First half has been challenging - the impact of the global down turn has seen some of our good projects face challenges. But the upside, some sectors like coffee have also begun to recover,” he observed.

BRD has been offering support to farmers since 2003 in form of soft loans to build coffee washing stations and the expansion of their business.

This year approximately Rwf4 billion is available in loans for coffee farmers. Coffee is one of the top revenue earners for government.

"We had a bumper harvest of quality coffee. The prices were good and when we talk to our clients, we have clear indication that they should be able to pay us with minimum difficulty,” Kayonga said.

However, the Bank has to clear bad debts – Non Performing Loans are currently estimated at 11 percent, against the Central Bank’s threshold of 7 percent.

"We are confident we shall meet the target (7 percent) by the end of the year because we know the reasons why it went up to 11 percent – provisioning for the coffee sector and one or two projects,” Kayonga explained.

According to the Central Bank, the production of tradable coffee is estimated to reach 26000 tons this year, from 14000 tons in 2009.

The increment is attributed to the use of more fertilizers, renewed plantations and expansion of cultivated area for coffee.

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