A US$100 million (about Rwf84 billion) fund designed to support startups is set to be launched later this year, an official at Rwanda Development Board (RDB) has said.
Those behind the plan to establish Rwanda Innovation Fund say it will help turn at least 10 ICT start-ups into corporations worth at least $50 million each, and extend financial and technical support to other young companies.
The Government will contribute $30 million toward the fund, while private investors will put in $70 million.
The initiative is part of broader efforts to realise the envisaged Kigali Innovation City, a $1.9 billion flagship project that seeks to catapult the country into a knowledge-based economy.
Speaking to The New Times on Wednesday, Steve Mutabazi, the ICT Sector Chief Investment Strategist at RDB, said Government secured funds to meet its 30 per cent contribution from the African Development, last week.
He pointed out that they needed to put in place a legal structure to govern the operations of the Fund.
“We trying to put in place a legal framework that would guide such partnerships that involve huge sums of money,” Mutabazi said.
A draft legal instrument is in place and it will be tabled before parliament soon, he added.
Efforts to establish the fund have been ongoing for about two and a half years now.
Initially the public-private venture was expected to be launched by June 2016.
The proposed fund, he said, will support between 20 and 25 ICT companies, of which at least 10 will grow into $50 million worth of corporations in 10 years.
To qualify for funding and technical support each of the companies must be worth at least $100,000, he said.
“The fund will enable our young ICT companies to grow and thrive. It’s part of efforts to transform Rwanda into a knowledge-based economy,” he said.
The project, according to RDB, will target early growth high impact tech-enabled sectors, with potential to scale up regionally. Priority sectors include energy clean technology and energy access solutions, smart transport and logistics, e-commerce, agri-tech, digital health, medical and technology devices, inclusive finance tech, and education technology.
Mutabazi said the private investors will be putting their money in promising ICT projects to help make them competitive and innovative.
The investors will buy shares in the beneficiary companies after which they can sell their shares through the Fund.
Mariam Muganga, the chief executive for Academic Bridge, an ICT-based system in education that supports the campaign for quality education through revolutionising school data management, told The New Times that ICT start-ups in the country are mostly held back by lack of funding and high taxes.
“The Rwanda Innovation Fund will help address the issue of lack of guarantee or collateral,” Muganga said. “I hope it will come into place very soon.”
The Minister for Information, Technology and Communications, Jean de Dieu Rurangirwa, said that the proposed Fund is one of the ways through which Government wants to tackle the challenges facing ICT start-ups and help them to grow.
“Lack of finance has always been a major problem,” he said.
The minister noted that tech start-up firms do not often get loans because the youths behind them have no collateral.
The initiative is part of the SMART Rwanda Master Plan, which seeks to create some 100,000 jobs.