Inside Rwanda’s Rwf186bn economic recovery fund

A waiter serves a customer in one hotel in Kigali. The fund will support businesses through loan restructuring for the tourism sector specifically hotels . / Sam Ngendahimana

The Government will in coming days roll out a special economic recovery fund estimated at over $200 million (approximately Rwf186bn) aimed at supporting local businesses that are hardest hit by the coronavirus pandemic.

The fund, according to sources, will help resuscitate the affected firms as well as safeguard employment for people employed by these companies.


The New Times understands that the government will inject an initial $100 million to kick-start the fund and plans to work closely with development partners, institutions, organizations, foundations among others to raise the funding.


The fund will support businesses through loan restructuring for the tourism sector specifically hotels, providing working capital for businesses most affected by COVID-19 to keep them operational and avoid lay-offs as well as loan guarantee for SMEs and Micro-businesses.


Among the obligations for firms eligible for the funds include paying employees’ salaries for the duration of the lockdown and commit to maintain employment during the support period.

In the event a company had outstanding loans, they will have to demonstrate that the business was able to service the level of debt prior to the outbreak.

Businesses will also be accessed on the basis of their financial health prior to the shock such as no concerns raised in previous external audit reports or  no pre-existing threats to future cash flows.

According to a concept note of the fund seen by The New Times, the fund will be managed by the Central Bank which will lend to banks for the purpose of lending to borrowers.

$50 million has been earmarked for restructuring loans to hotels which targets to allow for the refinancing of 35 per cent of total performing outstanding loans of the hotel sector that stood at Rwf134 billion for 571 borrowers as at end February.

The fund will be disbursed to hotels owners at 5 per cent interest rate compared to the current market rates of about 16 per cent.

The combined effective interest rate for the hotels’ loans would reduce from average of 16 per cent to around 12 per cent leading to a 24 per cent saving in annual interest expense for hotels over the loan term.

Funds for the support will be lent to banks without charge to ensure affordability on the part of beneficiaries.

For the support to other affected sectors, banks will lend to clients at 8 per cent interest rate with a grace period of up to 12 months and a repayment period of 5 years.

The Central Bank will lend to local banks at 3 per cent interest rate.

The support also includes Business Development Fund partial guarantee of up to 0.25 per cent to Small and Medium Enterprises and Micro businesses. $3M is earmarked for loan guarantees through BDF.

 The facility will support firms of all categories; large corporates, SMEs as well as Micro enterprises.

$30 million has been earmarked so far for large companies that have an annual turnover of Rwf 500M and above.  The funds are aimed at covering working capital, line of credit, trade finance and expenses.

Eligible firms will have to prove that they incurred over 50 per cent losses in the first 5 months of 2020 compared to the same period last year based on audited accounts.

Respective banks will conduct a case by case debt sustainability assessment. Other aspects likely to be considered include Rwanda Revenue Authority tax clearance certificate.

The funds will also be allocated to SMEs applying for working capital and expenses support   to support firms with a turnover of between Rwf12M to Rwf500M annually.  

Like other categories, eligible firms will also be reviewed on the basis of aspects including debt sustainability, tax conduct among others.

The rollout of the fund will be coordinated and monitored by the Economic Recovery Fund Steering Committee comprised of officials from the Ministries of Finance and Trade, Central Bank, Rwanda Development Board, Private Sector Federation and Rwanda Bankers’ Association.

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