Rwanda Business Development Fund (BDF) will this year spend over Rwf 11 billion by doubling funding and increasing the number of small and medium-size projects to 4,827.
The institution will mainly focus on viable project proposals from fresh graduates.
This was revealed during a press briefing on January 31, 2019, where BDF announced that they supported 2,083 businesses in 2018 through their credit guarantee, grants, SACCO refinancing, quasi-equity and leasing services.
“This year, we plan to double our projects to support 4,826 projects worth Rwf 11.5 billion, compared to 2,083 bankable projects worth over Rwf 11 billion last year,” said BDF Chief Executive Officer, Innocent Bulindi..
According to the CEO, BDF is focusing on projects proposed by young graduates because their budgets are not big, at least Rwf 6.5 million on average, giving them flexibility to provide funding and loan guarantee. “This year we are focusing on SME’s because their projects are easy to support. Projects proposed by young graduates are not so big and their budgets rarely exceed Rwf 6.5 million on average. This will give us flexibility to provide funding and guarantee,” explained Bulindi.
Special attention will be put on our youth that constitute about 70% of the population and, therefore, more strength is needed to empower them by creating more job opportunities. “Our target will be mainly the youth. By increasing the number of jobs created annually, this will help solve youth unemployment,” he said.
However, this new focus on SME’s will not change the requirements and procedures for funding big projects. Bulindi added that those big projects that require more funding, up to Rwf 500 million, will not be excluded in this process. “We are not excluding the big projects that require big amounts of funds.We shall still fund such projects in 2019. We are just changing our focus to support SME’s.”
The SME sector, including formal and informal businesses, comprises 98% of the businesses in Rwanda and 41% of all private sector employment. The SME sector has the potential to lower Rwanda’s trade imbalance.
However, SMEs in Rwanda face a myriad challenges including limited access to finance, high energy costs, inadequate skills and training, low levels of societal trust as well challenges with contract enforcement.
In past two years (2017 and 2018), the unemployment rate in Rwanda is slightly declining while the employment to population and Labour force participation Rate is increasing.
According to statistics from the National institute of Statistics Rwanda, unemployment rate decreased by 0.7 percentage points from 16.7 in February 2017 to 16.0 percent in February 2018 and by 3.4 percentage points between August 2017 and August 2018. Round to round comparison shows a decline of 1.1 percentage points from 17.8 percent in August 2017 to 16.0 in February 2018.
Currently, Rwanda’s unemployment rate stands at 13.2% and the government has targeted to create 200,000 jobs every year and 1.5 million off-farm jobs in its seven-year program.