The European Investment Bank (EIB) has entered into a €8 million (approx Rwf6.4bn) agreement with the Rwanda Development Bank (BRD) that will be channelled towards medium and long-term financing for small businesses in Rwanda.
The loan financing package will target crucial long-term investment by local companies, mainly Small and Medium Enterprises, to support growth and job creation.
The loan agreement was signed yesterday at the European Investment Bank’s headquarters in Luxembourg by the BRD Chief Executive, Jack Nkusi Kayonga and EIB’s Vice President responsible for sub-Saharan Africa, Plutarchos Sakellaris.
The loan is part of the EIB activities in Rwanda which predominantly focus on providing short-term loans and access to long-term credit, which is recognised as a major constraint to economic growth in the country.
Sakellaris said that the loan is part of the Rwanda Private Sector Support Initiative which is EIB’s fifth engagement with BRD. He noted that Rwanda’s progress is encouraging and the bank is committed to support such development initiatives.
“Economic growth in Rwanda is setting the pace for the wider Great Lakes region and across East Africa.
“The European Investment Bank notes successful past cooperation with Rwanda Development Bank and is committed to supporting the local financial sector and stimulating future private sector development across Africa,” he said.
Upon signing the agreement, Kayonga noted that EIB financing had benefited businesses in Rwanda and the funds would go a long way in boosting private sector development.
“Working closely over many years with the European Investment Bank has enabled numerous Rwandan companies to benefit from long-term loans.
“This cooperation has also allowed the BRD to address crucial challenges on the path to international banking best practice and ensuring our staff can contribute to private sector growth in Rwanda,” Kayonga said.
The Head of the European Union (EU) Delegation to Rwanda, Ambassador Michel Arrion, welcomed the development, observing that the fund would not only boost private sector growth, but will also directly contribute to poverty reduction.
“Growth of the private sector is essential for economic development and poverty reduction in Rwanda,” Arrion said.
“Continued support by the European Union’s long-term lending institution for BRD will not only benefit Rwandan business, but also help BRD better face future challenges”. .
The EIB’s credit line will allow BRD to provide business loans in US dollars, Euros and Rwandan francs.
Funding will focus on business sectors currently underserved by commercial banks, notably agriculture, services, tourism and industry
The Rwanda Private Sector Support Initiative will also include a dedicated technical assistance program to enable BRD to broaden lending activities, advise on electronic banking, improve risk and credit analysis and enhance the quality of their portfolio based on international best practices.
A total of 17 Rwandan businesses, received more than €500,000, from BRD under the previous EIB financed program.
Through the funding, over 600 new jobs were created in agricultural, tourism, education and telecommunications sectors.
The European Investment Bank, the long-term lending institution of the European Union, whose shareholders are the 27 European Union member states, has been active in Africa for over 40 years.
EIB activities follow policies and objectives set down by European Union member states and whose Finance Ministers are the bank’s Governors.