The Business Development Fund (BDF), set up to support the establishment and growth of Small and Medium Enterprises was, yesterday, launched as an autonomous company.
BDF which was under the Rwanda Development Bank (BRD) will act as a credit guarantee facility, offer lines of credit, matching grants and advisory services.
The move is in line with the government’s commitment to establish a private sector led economy.
The company is managing a fund worth Rwf11 billion from the Central Bank and the ministries of trade, agriculture, public service and Gender and BRD.
Speaking at the launch, the Minister of Trade and commerce, Francois Kanimba, said that this year’s National Leadership set SME development as a key priority to achieve its vision of ensuring that Rwanda becomes a middle income economy by 2020.
“As we launch the BDF, let this impetus be seized by other development actors in Rwanda to engage in innovative activities that can create economic change in Rwanda and inspire different sections of the population to have an entrepreneurial orientation,” he said.
The minister noted that there are many struggling SMEs that yearn for support, adding that with concerted efforts among players in this sector, it is possible achieve a lot.
“We need a large number of Rwandans to engage in business, create employment and contribute to private sector development,” Kanimba said.
“In the framework of implementing the SME policy, the Ministry of Trade and Industry has signed a Memorandum of Understanding with BDF to work together on supporting the struggling SMEs and promote an entrepreneurial spirit across the country,” he said.
The CEO of BDF, Desire Rumanyika, said that the direct target market is commercial banks and microfinance institutions where the end user will be cooperatives, companies and individuals.
Rumanyika said that BDF has made significant contribution in guaranteeing different projects through the participating financial institutions.
He added that BDF has, of today, projects totaling to Rwf5.4bn with guarantee loans that were granted to 90 SMEs from different banks.
He disclosed that most SMEs and agricultural projects financed are located in rural areas with remarkable gaps in capacities and skills.
“BDF has started capacity building and technical assistance initiatives that is tailor made to the need of specific agricultural and livelihood projects,” Rumanyika said.
The CEO of Private Sector Federation, Rogers Munyampenda, observed that while there is a 50 percent increase in informal or micro SMEs, this year, many of them shut down.
The mortality rate for SMEs in the country stands at 82 per cent with many failing to survive in the first year of establishment, Munyampenda said.
“It is not only due to lack of access to loans and capital, it’s a combination of many factors,” he added, citing skills gap, lack of management skills and infrastructure as the issues hindering growth and survival of SMEs.