GroFin pledges more support to SMEs
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GroFin Rwanda, a private equity firm has pledged to invest more resources into the manufacturing sector to enhance productivity.
Christian Bugabo, the firm’s chief investment executive, said the support is designed to boost Made in Rwanda campaign and help make the sector competitive.
“We are very much aware of entrepreneurs and business owners looking to start or grow their businesses but are rather facing challenges including access to affordable capital; we therefore want to partner with the sector to be able boost local production,” he said.
Bugabo who was speaking to manufacturers recently urged industrialists to work with a partner who can provide finance that is structured, according to the needs of their business.
“They also need to find experienced business support services and networks that improve their chances of success,” Bugabo said adding that the approach for financial institutions should be based on verifiable socio-economic impact based on real outcomes but also ensuring lenders are providing expertise and knowledge to support local manufacturers.
So far, GroFin has invested more than $20 million (Rwf17 billion) in SMEs and the manufacturing sector accounts for 20 per cent of total investments.
Alphonse Kwizera, the Rwanda Association of Manufacturers (RAM) technical expert said the move to support the sector financially will not only help increase production, but could equally make the sector more profitable.
“Access to affordable finance is one of the challenges the sector is facing, we must therefore bring on board more private equity firms to reduce the cost of doing business with the sector.”
However, many sector experts agree that the gestation period of investments in the manufacturing sector is long and private equity investors remain reluctant to put money thus affecting productivity.
Recent statistics from central Bank indicate a decline in new cash loans to the sector.
John Rwangombwa, the central bank governor said the share of new cash loans to the manufacturing sector reduced to 6.8 per cent during the first quarter of 2017 compared to 8.4 per cent same period in 2016.
Despite this decline, the sector was able to contribute more than Rwf109 billion to the national economy during the first quarter of 2017, according to figures from the National institute of statistics of Rwanda (NSIR).