BK secures US$20M to boost lending

Bank of Kigali (BK) will increase its lending to the private sector by 30 percent to Rwf130 billion this year from Rwf110 billion last year after securing a credit line from the French Development Agency (AFD). BK, which is the country’s biggest lender, received a credit line worth US$20 million (Rwf12 billion) and a guarantee fund of €6 million to Support Small and Medium Enterprises. “We believe the credit line agreement will translate into higher demand for credit and we intend not to discriminate any project in the economy,” said James Gatera, the Managing Director of BK, during the signing ceremony at the Bank’s head office. Gatera emphasised that the credit line will be used to extend long term credit to projects in Rwanda while the guarantee scheme will act as collateral to SME’s with out collateral or security give to the banks. “It sounds huge money but if you consider developments that are taking place, it’s like a drop in an ocean, and at BK, we want to play an important role in developing our SME’s,” he stressed. The $20 million loan payable in ten years will be disbursed in four installments of five million each. It carries an interest rate of 3.54 percent, the bank said. The loan is part of the Bank’s long term plan to secure long term capital for seizing opportunities through financing the country’s budding private sector. BK is also at advanced stages of launching its Initial Public Offering (IPO).The loan comes at a time the economy is in dire need of long term financing following a credit squeeze in the last two years. According to the central bank, in the first quarter of 2011, banks approved Rwf62 billion worth of new loans compared to Rwf52 billion in same period last year, the central bank says. Credit to the private sector is expected to grow by 22.4 percent this year, up from 12.7 percent in 2010. Central bank Governor, Francois Kanimba, hailed that the loan as timely and important, especially when the economy is growing fast with needed investment to sustain the long term growth. “Having on board such big support is very welcome, and as a regulator, I confirm to our development partners and French Cooperation that this is extremely important especially in a bank like BK that showed dynamism in supporting investments in the country,” Kanimba said. French Ambassador to Rwanda, Laurent Contini, expressed his gratitude to contribute to the development financial sector in Rwanda and to be a partner in the implementation of some of the priorities to support private sector growth. “Perhaps it’s the first after what you know about Rwanda French relations and it’s just the beginning of the partnership that we want to extend to every sector in Rwanda,” he said. Ends

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BK secures US$20M to boost lending