On a sunny morning, Epiphanie Mukadisi sits in front of a restaurant and bar in Gikondo, Kicukiro District, admiring her finger nails.
After a brief introduction, Mukadisi tells how she turned her life around.
The 29-year-old had long nursed a plan to curve her own path – she would save some money from her hotel job to set up a bar and guest house business.
When Mukadisi felt it was time to travel an entrepreneurial journey, she rented a house for her business in Gikondo.
“I started small with bar and lodging services. I had started with just Rwf500,000. At that time I thought my business would just be another addition to the number of small and medium enterprises that fold after one year,” Mukadisi told Saturday Times.
But even with significant effort, she realised her business wasn’t growing at all yet she didn’t have enough capital to boost her business prospects.
Mukadisi had to think of other options.
Mukadisi’s mind was racing but didn’t know where to turn until a friend advised that her dream could become a reality with the Business Development Fund (BDF) guarantee facility.
After she approached BDF, she was equipped with project planning skills.
“I got the idea of BDF guarantee facility from a colleague in 2011, and the development bank facilitated my dream of getting a loan of Rwf4 million from a bank to boost my business,” Mukadisi said.
She did not get any barrier when she approached the bank to seek a loan because she had a recommendation letter from BDF and an elaborate project plan.
Mukadisi said her business is now booming – she has bought a plot of land, worth Rwf2 million, and remains with two months to complete servicing the bank loan.
Her target is to build her own structure to work in and stop renting.
Mukadisi also hopes to turn the guest house into a hotel business in the future.
In a training that brought together 300 women in Kigali, Mukadisi was among the best 15 awarded a certificate on financial education and business management by the City of Kigali in January 2014.
She appealed to BDF to increase workshops for small and medium size entrepreneurs with motivation speakers.
The criteria for BDF support
Albert Mugisha, relationship officer at BDF, said their guarantee is a service given through an agreement with a bank.
“First, the major requirement is that the bank should be willing to give you a loan, and it should be willing to make the request for you in BDF,” Mugisha said.
BDF assesses the prospects of a given project for the owner and the bank, he added.
“We need to make sure that we give you a guarantee for a profitable venture where one will be able to pay back the loan,” Mugisha said, adding that BDF guarantee does not exceed 10 years and that the development bank cannot take up a project below a year.
“We introduced the essence of a recommendation letter and it is the linchpin in the entire transaction. You write to the chief executive of BDF that you have an idea of a project, including the amount you need and the bank that will help you. So, if we see your business is profitable, we write you a recommendation letter assuring our guarantee to your business and then you take it with the business plan to the bank,” Mugisha said.
Other requirements are that interested women and youth below the age of 30 must get a guarantee of 75 per cent of the loan whereas other persons who are above 30 get a guarantee of 50 per cent of the requested loan.
Mugisha said even individual persons who meet the requirements can apply for a loan that is below Rwf10 million through BDF with a guarantee of 75 per cent, but this applies to women or youth, 50 per cent for men aged over 30.
“For women, we do not looks at the age,” Mugisha added.
He said BDF does not target any particular projects but look at the viability of a business one is seeking funds for.
“It can be agriculture, it can be commercial, transport, it can be hospitality (hotels), we cover all sectors,” he said.
The maximum guarantee of BDF for an agricultural project is Rwf500 million, but for other projects that are not agriculture-based, the maximum guarantee is Rwf300 million.
Mugisha said this is because BDF wants to support agricultural projects that many banks are often reluctant to fund.
BDF works with 99 per cent of all the banks in the country, including more than 400 microfinance institutions.
From January to June 2015, BDF supported 683 projects of women and youth with Rwf131.8 million.
For small and medium enterprises (SMEs), in January to June 2015, BDF supported 399 projects worth slightly over Rwf1 billion, whereas in January to June 2016, BDF supported 590 projects (48 per cent) of SMEs with Rwf2.3 billion (98 per cent).
For the support that was channeled through savings and credit cooperatives, BDF provided Rwf311.7 million for 22 projects in Jan-June 2015 whereas in January to June 2016, they funded nine projects with Rwf204.3 million.
In agriculture and farming, BDF supported 202 projects with Rwf1.9 billion, whereas in January to June 2016, these projects increased to 219 and were supported with Rwf1.6 billion.