Access to affordable funding is one of the top challenges faced by young entrepreneurs presently, especially start-ups, and lenders are reluctant to invest in their ventures since many lack collateral. Limited access to affordable credit has also been identified by many experts as one of the factors hindering growth and innovation among most start-ups.
The problem has caused ‘headaches’ for government and stakeholders while trying to find lasting solutions and ensure entrepreneurs in the country, particularly the young people, get funds required to invest in their businesses.
Presently, some organisations and funders usually conduct entrepreneurship competitions through which innovative start-ups get funding. In March, Bank of Kigali announced the BK Urumuri Initiative contest, a Rwf60 million interest-free financing package to support young entrepreneurs.
The initiative, which the bank says will be an annual event, has been hailed by sector experts, calling it a “right step” that will attract youth to embrace entrepreneurship and contribute to Rwanda’s economic development.
Julienne Oyler, the chief executive of Inkomoko, an entrepreneurship support organisation, said there is an increasing appetite for credit from the young entrepreneurs that banks cannot ignore anymore.
“When we announced the competition, the response was overwhelming as hundreds of applications poured in within weeks. In the end, over 400 young entrepreneurs had submitted their projects, a clear indication of the thirst for credit among enterprising youth,” she noted.
Oyler was speaking during the BK Urumuri Initiative contest award ceremony on Wednesday, where eight promising and innovative start-ups bagged interest-free loans, ranging from Rwf3 million to Rwf11.7 million.
Kolin Emmanuel, of DSIS&T Irrigation and one of the beneficiaries, said access to credit by start-ups is vital for Rwanda to realise its development objectives.
“This is how we will be able to create more jobs and support local production,” he said.
The initiative is among several activities to mark Bank of Kigali’s 50th anniversary. By conducting the contest and supporting start-ups, the lender said it wanted to “trace its baby steps in 1966 in a symbolic way” by helping discover ideas with potential to be the ‘next big thing’ in the economy.
Access to funding boosts innovation, production
According to Dr Diane Karusisi, the Bank of Kigali chief executive officer, the initiative is designed to ease access to affordable finance by youth led start-ups that have the potential to expand and create more jobs.
“Addressing the challenge of access to finance among start-ups will greatly boost innovation and productivity among entrepreneurs and thus drive Rwanda toward economic sustainability,” she said.
She urged the youth to take advantage of the country’s great leadership and the conducive business environment to innovate and support Rwanda’s development goals.
Karusisi believes financial institutions have a huge role to play in enabling start-ups with potential to grow and create jobs for others to get money they need to take their projects to the next level.
“Perhaps we should create a ‘bankers’ connect’ group to link young entrepreneurs to financial institutions and enhance their access to financing and power their enterprises to sustainable growth,” said Karusisi.
And the interest-free loan winners are…
SafeMotos, tech start-up which developed an app that connects customers to safe moto taxi drivers, was biggest winner in the just-concluded BK Urumuri initiative competition walking away with Rwf11.7 million interest free loan.
The tech start-up was followed by PuroPro Windshields (Rwf9.3 million), and Karisimbi Wines (Rwf9 million). Mudacumura Publishing received Rwf8 million interest-free credit, DSIS&T Irrigation Rwf4 million, while Yummy and Fresh Delivery got Rwf3.5 million, and Murukali Online bagged Rwf6 million, among others.
All the finalists went through a mentorship training conducted by Inkomoko. The competition attracted more than 400 applicants, but only 13 start-ups made the finals and eight won interest-free loans.
The participants pitched start-ups with diverse and innovative projects, which have strong potential to grow and create jobs for other Rwandans, as well as support the country’s development aspirations.