Small-and-medium enterprises (SMEs) funding woes could soon reduce after Kenya Commercial Bank Rwanda (KCB Rwanda) secured a six million euros (Rwf5.3b) tailored loan from the European Investment Bank.
The deal was signed between the two institutions in Kampala on Monday.
Maurice Toroitich, the KCB Rwanda managing director, signed the deal on behalf of the bank, while the European Investment Bank (EIB) was represented by Pim van Ballekom, its vice-president for sub-Saharan Africa.
Toroitich said the facility would aid SMEs engaged in a wide range of businesses with local and hard currency loans of up to 50,000 euros (Rwf44.1m) each.
“With this facility, KCB Rwanda will be able to improve its funding capacity at an affordable rate and continue supporting the growth of SMEs,” Toroitich said.
He noted that SMEs and micro-business development offer the bank ample business opportunities and also act an enabler of the country’s transformation to a middle income economy by the year 2020.
KCB Rwanda joins a list of other banks that have received by long-term loans to fund SMEs.
Last month, Bank of Kigali signed a $10m credit line from the OPEC Fund for International Development (OFID), while Development Bank of Rwanda also secured $10m funding from the East African Development Bank (EADB) in July for on-lending to SMEs.
The funding to KCB Rwanda is part of the European Investment Bank’s targeted support to promote lending to small businesses by commercial banks and micro-finance institutions in Kenya, Uganda, Tanzania and Rwanda.
Uganda’s dfcu Bank also received a credit line of 5m euros (Rwf4.4b) from EIB to serve the same purpose in the country.
“The European Investment Bank recognises the essential role small businesses play in creating jobs and unlocking business opportunities.
“The bank wants to ensure that Ugandan and Rwandan entrepreneurs develop their business ideas,” Pim van Ballekom said.
He said the new engagement by Europe’s long-term lending institution is built on a strong track record of supporting private sector investment in East Africa in co-operation with local banks and recognition of the importance of micro-finance to stimulate private sector growth.
“This engagement has the twin policy goals of promoting creation of new jobs and ensuring enhanced access to funding by micro and small enterprises,” Pim van Ballekom said.