Rwanda Development Bank (BRD) announced a guarantee package to rescue Small and Medium Enterprises (SMEs), which are increasingly desperate for more financing alternatives.

The Rwf7.8 billion guarantee in form of grants and funds will help SMEs access financial facilities from commercial banks and MFIs without necessarily providing guarantees.

Janet Kanyambo, the Grants and Funds Manager at BRD noted that Rwf1.5 billion will target SMEs that are engaged in agriculture and agro-processing while Rwf3.3 billion will focus on SMEs in the business sector such as companies and individual business enterprises.

An Rwf3 billion Rural Investment Facility Grant will aim at providing advisory services, training among others.

In this arrangement, BRD will provide guarantee funds to banks and MFIs to finance SMEs which may lack security.

The other way would be for BRD to pay part of the loan acquired by the SMEs in question.

 "We are partnering with commercial banks and MFIs to identify for us the SMEs who may have viable businesses but may lack guarantees to acquire funds to run or start their businesses”, she said.

According to the Private Sector Study of 2008, Rwanda has 72,000 SMEs, comprising approximately 98 per cent of the total businesses in Rwanda and accounting for 41 per cent of all private sector employment.

The study notes that only a quarter of 1/3 SMEs are registered, 90 per cent are micro sized 0.22 per cent medium size while 66 per cent describe themselves as struggling or in trouble.

The government in another move to strengthen this initiative launched the SME action policy. SME development is a national priority for economic growth and development.

"SME’s provide opportunities for poor and unskilled and new entrants into labour market,” John Nkubana, the officer in Charge Industry Development in the ministry of Trade and Industry revealed.

 Nkubana noted that the plan will focus among others on the development of SME clusters and demonstration and transfer of appropriate technologies to SMEs.

 He added that under the plan, a flat rate tax on SMEs will be established while all local government fees and taxes would be streamlined and codificated.

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