The Minister of Trade and Industry, Prudence Sebahizi, on Tuesday, April 1, defended the existence of the Business Development Fund (BDF), emphasizing its role in supporting business growth and economic development. He was responding to MP Christine Mukabunani’s proposal that BDF should be disbanded, arguing that it has not been helpful to people. BDF was established in 2011 by the government through the Development Bank of Rwanda (BRD) with an aim to support Small and Medium Enterprises (SMEs) in accessing finance as well as advisory services. To do so, it has to work with financial institutions (banks, microfinance institutions, including Savings and Credit Cooperatives – SACCOs) to, among others, cover 50-75 per cent of the collateral required by such lenders to help SMEs grow and sustain their businesses, as per the fund. ALSO READ: Business Development Fund set to reform financing policy for SMEs Deputy Speaker of the Chamber of Deputies, Beline Uwineza, noted that many intended beneficiaries are unaware of BDF’s services. She highlighted several concerns raised by lawmakers, including the limited number of BDF staff at the district level—only two per district—who are responsible for project appraisal. This, she said, results in service delays and inadequate monitoring of projects benefiting from BDF guarantees. Another concern is the Rwf12,000 fee that loan applicants must pay in advance for project appraisal. “Sometimes, their projects do not secure loans, discouraging potential applicants,” Uwineza said. Again, she said, they include a Rwf12,000 fee that a person seeking loans guaranteed by BDF has to pay in advance for their project to be appraised by a business development advisor to see whether it qualifies for funding. “Yet, sometimes their project does not secure loans, which discourages those who want to request such a loan,” Uwineza said. For Mukabunani, the money under BDF management can be lent to beneficiaries through other entities, citing Umurenge Savings and Credit Cooperatives (U-SACCOs). “If you look at how long BDF has been existing, there is no much impact as one would expect. It is not visible, people do not know it...I remember the visits that MPs made in 2022 and found the same issues were there,” she said, adding that while some measures were introduced to address them, “nothing fruitful came from that.” ALSO READ: BDF adopts new model to increase access to finance Minister says BDF still matters Despite the identified issues, Sebahizi said that BDF has done some work that should not be ignored. “In 14 years of BDF’s existence so far, in the reports we get [indicate] there are more than 53,000 projects that were supported, and 159,000 jobs that were provided,” he said, adding that 40 per cent of the beneficiaries were women, while 25 per cent were youth. Again, he said that BDF operates in line with the government’s agenda, “and helps us in resource mobilisation.” “As of now, more than Rwf120 billion has been mobilised through BDF,” he indicated. For Sebahizi, BDF should not be considered as an entity that did not do anything, pointing out that what should be focused on is to ensure that it is effective. “We have a target to get at more than 60,000 jobs created through BDF under National Strategy for Transformation (NST2),” he said. He expressed commitment to continue monitoring the performance of BDF, and make needed reforms in its operations to address the issues in question, ensuring the fund achieves set targets. Speaker Gertrude Kazarwa said that the Chamber of Deputies will follow up on the implementation of the measures announced by the minister to solve the issues facing BDF management and operations.
