The International Finance Corporation (IFC) will carry-out a survey on how Rwanda’s Small and Medium Enterprises (SMEs) have embraced leasing as an alternative source of capital in order to offer perfect solutions and programmes for supporting their growth.
The development comes a few months after the investment arm of the World Bank group alongside the Association of Micro Finance Institutions (AMIR) through Microfinance Institutions (MFIs) introduced micro-leasing for the SMEs segment.
Atete Rugege Karimba, the IFC’s Leasing Programme Operations Analyst said in an interview yesterday that the study will identify the percentage of SMEs involved and the challenges they encounter.
SMEs constitute the biggest percentage of Rwanda’s private sector thus considered crucial in the country’s economic development.
Different studies have pointed out that they struggle to access financing, mainly because of lack of collateral to stake in banks.
IFC, which invests directly in companies and guarantees loans to private investors, earlier this year, recommended that financial institutions should embrace micro leasing for SMEs.
The IFC’s Team Leader and Legal Specialist, Brian Kirungi said that micro leasing would address SMEs’ current barriers to access to finance.
“This would facilitate establishment or expansion of micro and small businesses,” he explained.
It was proposed that Micro Finance Institutions (MFIs) are better placed to offer micro leases due to their presence in rural areas. A micro lease ranges between Rwf75,000 to Rwf2.5 million.
Karimba also revealed that there will be another study on the entire leasing industry in Rwanda.
“This aims to understand the developments made during the last years of leasing in Rwanda. We expect declines owing to the impact of the global credit crunch on local banks.”
Information from IFC shows that the leasing industry is worth $30 million (Rwf17.1 billion), representing a 20 percent growth since June 2008 when it was worth $25 million (Rwf14 billion).
The programme was inaugurated in 2006 by Commercial Bank of Rwanda (BCR) and Fina Bank.
The initiative has also attracted other financial players like Ecobank, Cogebanque and Vision Finance Microfinance following the establishment the Rwanda Leasing Association aimed at promoting and strengthen leasing the country.