International Finance Corporation (IFC), the World Bank’s investment arm yesterday announced the disbursement of its first local currency loan worth $2.5 m to Bakhresa Grain Milling for the purchase of trucks to transport wheat from the Tanzanian port city of Dar es Salaam to Kigali.
The swap, which is the first of its kind, follows an agreement signed between the central bank in December last year to provide Rwandan franc-denominated loans to boost lending to the private sector.
“Through this loan we can access long-term financing to expand our operations and efficiently increase the supply of wheat to Kigali,” said Mounir Bakhresa, Managing Director of Bakhresa Grain Milling Rwanda.
Earlier this year, IFC provided $8 million to Bakhresa to build a flour mill in Kigali with a capacity of 250 tons a day. The new mill is expected to be commissioned by early next year.
Commenting on the transaction, Jean-Philippe Prosper, IFC’s Regional Director of East and Southern Africa, noted that by working with the private sector IFC is able to create more opportunities for sustainable economic growth in Rwanda.
“This transaction supports our strategy in Africa to develop specific financing tools that meet the needs of our local clients and helps support key sectors such as agribusiness,” Prosper said.
According to the agreement, IFC can either lend directly or through banks which are committed to Small and Medium Enterprises (SMEs) financing.
François Kanimba, the Governor of the central bank underscored that the initiative is a step towards the development of Rwanda’s financial market.
While IFC traditionally offers local currency loans by entering into swaps with major international banks, in Rwanda it is working with the central bank as currently there are no banks that can provide long-term swaps.
“The swap agreement enables the National Bank of Rwanda and IFC to collaborate in further developing the country’s financial markets and support the growth of the private sector,” said Kanimba.