Bank of Kigali yesterday secured a credit line of Rwf30bn from the European Investment Bank, the long-term lending institution of the European Union to support Small and Medium Enterprises (SMEs).
The deal, signed on the sidelines of the ongoing Africa CEO Forum, is expected to tackle access to finance challenges among local SMEs, particularly in energy, manufacturing and trade, agriculture, transport and tourism sectors.
The credit line, with a maturity period of seven years, is considerably cheaper compared to loans that commercial banks access, because it is coming from a development finance institution.
The credit has an interest of 4 per cent to 5 per cent, half the interest rate by commercial lenders which stands at about 10 per cent.
Diane Karusisi, the Chief Executive Officer of Bank of Kigali, said that the deal will improve the bank’s interventions in long-term and affordable loans.
“Addressing the need for affordable and long-term business financing enables the private sector to become the leading player in the development of the country by steering a transformational and industrial economy.”
She added: “We have found the right partner in European Investment Bank to ensure that financing is not a bottleneck to creating a vibrant private sector in Rwanda.”
Bank of Kigali will match the amount of new loan with another Rwf30bn capital bringing the total to Rwf60bn that will be injected into unlocking new private sector investment in critical sectors.
Karusisi said that eligible beneficiaries for credit scope are firms with turnover of less than Rwf1 billion.
Dr. Diane Karusisi, the Chief Executive Officer of Bank of Kigali with Ambroise Fayolle, the Vice President of the European Investment Bank sign documents on March 25, 2019 at Kigali. Emmanuel Kwizera
On the reduced interest rate, she said that cost will be determined by the levels of risk of the various projects to be financed.
Ambroise Fayolle, the Vice President of the European Investment Bank, said that the intervention aims at enabling emerging firms build on their strengths and contribute to sustainable economic development.
“Accelerating private sector investment is crucial to creating jobs, unlock opportunities and enable businesses to succeed and the European Investment Bank is committed to supporting private sector investment in Africa.
“In recent years, companies across Rwanda have benefited from the excellent cooperation between the European Investment Bank and the Bank of Kigali,” he said.
The European Investment Bank has provided Rwf63 billion to private sector investment in Rwanda in partnership with the Bank of Kigali since 2009.
Amb. Nicola Bellomo, the European Union envoy to Rwanda, said that among anticipated benefits of the intervention would be increased jobs.