Relief as BRD slashes interest rates to boost export industry

Rwanda’s export industry could become more competitive thanks to the Development Bank of Rwanda’s (BRD) initiative to reduce interest rates for local exporters. The Bank has said it will be reducing its interest rates from 16.5 per cent to 10 per cent to facilitate the export sector. This new development according to Alex Kanyankole the Bank’s Chief Executive officer is in line with BRD’s effort to re-energize the Export Growth Facility fund and boost competitiveness of the country’s export sector. Kanyankole, said the move is designed to help the small and medium entrepreneurs (SMEs) with a turnover of at least $ 50,000 and $1million to have smooth access to credit. This will translate into more job opportunities and contribute to poverty reduction and a faster economic growth. According to the country’s growth blueprint, the Second Economic Development and Poverty Reduction Strategy (EDPRS II), governments look to increase exports to 28 per cent per year, from about 20 per cent. Last year, government launched the export growth facility Fund as part of the strategy to realize the objective. The idea was to channel more than Rwf1 billion, through the Development Bank of Rwanda (BRD), to facilitate exporters especially the SMEs have access to credit . Exporters would then access the funds at about 8 per cent interest per annum, covering at least 50 per cent of the cost exporters incur as they try to seek new markets abroad. Therefore, this new initiative according to sector players is responding to governments needs to meet its export targets. To implement this facility, BRD has agreed that, this facility will be made available to identified export oriented SMEs through a selected number of partner financial institutions such as BPR, I&M Bank, EcoBank and Urwego Opportunity Bank. More technical assistance Meanwhile, Benjamin Manzi, BRD’s Head of investments, said the Bank will provide technical assistance to stakeholders to help boost their capacity to develop products that respond to SMEs needs. “The EGF is meant to facilitate firms in the horticulture, agro-processing, artisanal mining and manufacturing sectors, so we want to ensure that we assist players in this sector to become more innovative and boost their productivity,” Manzi said. Low interest rates will make the export business profitable. (File) He added that the main focus is to encourage private sector investments in exports through subsidized loans and broaden the range of financial services of Rwanda’s formal finance. Rwanda’s total exports recorded poor performance in 2015, decreasing by 6.8 per cent in value. The sector managed to fetch only $558.8 million during the 11 months of 2015 down $ 599.8 million in 2014. The country’s export volume however increased by 20.5 per cent Export targets by NAEB The National Agriculture Export Board (NAEB) is projecting to fetch more revenues from tea exports, from $65 million (about Rwf44.2b) to $147 million (about Rwf100b) by 2017, while coffee export earnings are expected to more than double from $73 million to $157 million during the same period. Government also plans to enhance honey, handcrafts and horticulture production and exports as part of the new strategy. Lack of access to affordable credit is only part of the problem, according to business analysts. The country’s export industry is still struggling with challenges, including, limited market, high taxes, poor export infrastructure and lack of skilled manpower. Other initiatives to boost exports Subsequently, the government signed deals with close to 40 firms to support them in various ways with the view of expanding the country’s export base, increasing volumes and earnings. Additional reporting by Peterson Tumwebaze

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Relief as BRD slashes interest rates to boost export industry