Rwanda Development Bank (BRD) is this year planning to increase their credit fund that avails finances to Micro Finance Institutions (MFIs) to Rwf5 billion, Business Times has learnt.
The credit fund that was established in October, 2009, seeks to boost the activities of the MFIs which include savings and credit.
Last year, the fund opened with Rwf4 billion available for MFIs to access finance and according to the development bank, this year the fund will receive another boost of Rwf1 billion.
“The increase will give the MFIs a more lending capacity to their clients since the problem of limited resources will be some how solved,” said Jack Kayonga the Managing Director of BRD in an interview with Business Times.
Since the launch of the fund, MFIs have so far withdrawn a total of between Rwf1-2 billion as the bank expects it to double this year.
Kayonga also mentioned that BRD wants to use this fund as a vehicle through which rural financing especially for the agriculture sector can be achieved by the MFIs giving credit to their clients.
The access of loans from BRD by the MFIs comes with soft conditions compared to the commercial loans that they previously would access.
The conditions include a much lower interest rate of 6 percent for the MFIs compared to 8-15 percent that the bank charges other clients.
It is also expected that with a lower interest rate, the MFIs, will give credit to their clients at a much better rate.
The access of finances directly from BRD will make MFIs access loans quicker than previously which will help improve their work.