Officials at Rwanda’s Private Sector Federation (PSF) have requested government to increase funding for the Export Guarantee Fund, which the government set up three years ago to boost exports.
Callixte Kanamugire, Chief Advocacy Officer at PSF, told members of the parliamentary Standing Committee on National Budget and Patrimony last week that there is need to increase the amount of funds allocated to the fund in order to serve more export-oriented businesses, especially bigger enterprises.
At the core of the worries held by PSF officials is the shrinking budget for the fund and they brought to the attention of MPs that it’s a concern that while in the 2016/2017 financial year the government allocated Rwf8 billion to the fund, it has since reduced the money to Rwf1.2 billion in the current financial year 2017/2018 as well as the next fiscal year 2018/2019.
“We want the government to increase the fund so that more people can have access to it. We are afraid that the fund is shrinking and that’s the issue we are raising today,” Kanamugire said.
Established in 2015, the export growth facility fund was introduced as part of a strategy to boost exports and reduce the country’s trade deficit gap by easing access to loans and providing grants to locally owned Small and medium-sized enterprises (SMEs) operating in strategic areas.
The areas covered by the fund, which is managed through the Rwanda Development Bank (BRD), include horticulture, agro-processing, manufacturing, as well as artisanal mining.
Initially, businesses targeted by the fund were registered Rwandan promising SMEs (with an annual turnover ranging between Rwf40 million and 800 million).
But Kanamugire told MPs last week that the fund needs to be extended to larger enterprises and foreign exporters from Rwanda in order to maximise its impact.
“There is need to increase the funds allocated to the EGF and not only target SMEs but also large companies that would provide quicker wins in the export trade in terms of volumes and profitability, hence spurring economic growth,” he said in a presentation meant to highlight PSF’s wishes for the government’s budget in the next fiscal year.
MPs on the budget committee have been holding budget hearings to collect comments on the government’s budget proposals for the next fiscal year 2018/19.
The estimates are part of the Budget Framework Paper (BFP) and midterm budget proposal for the next three financial years (2018/19-2020/21) tabled in the Lower House by the government two weeks ago.
The Minister for Trade and Industry, Vincent Munyeshyaka, told The New Times last week that the reduced budget for the export facility fund shouldn’t be understood as a policy shift but a temporary lack of funds that can be addressed any time.
“MINECOFIN (Ministry of Finance) is talking to different donors so we can get more funds for the facility. The Government will continue to look for means to support this Fund,” he said.