Grofin’s lending to local Small and Medium Enterprises (SMEs) has reached Rwf3.1 billion, according to the General Manager of Grofin Rwanda, Eric Rwigamba.
The firm has so far supported 12 SMEs of which four are purely start-ups.
“Those SMEs are making some money, employing people and paying taxes and we are so particular on environmental issues. We have a social and environmental governance policy that we enforce to our clients,” Rwigamba told Business Times.
Grofin is a leading growth finance fund management company specialising in risk capital and business support for small and medium businesses in emerging markets.
Rwigamba said that they recently approved two projects in general trade at a tune of Rwf900m while other two estimated at Rwf410m are under review. The four projects are expected generate around 45 jobs.
It comes at a time SMEs across Rwanda are struggling to reach their potential due to challenges of accessing finance as a result of lack of collateral.
According to Rwigamba, Grofin is a viability lender which focuses on the viability of the business and the entrepreneur.
“Our business development manager will review your proposal and try to improve it from a mere business proposal to a realistic business plan.
From that point the business development manger will help to assess the viability of the entrepreneur and the viability of the business.
The progress has also been made in light of falling liquidity levels in the local banking industry which tightened credit to the private sector and increased lending rates.
However, Rwigamba said that their interest rates are slightly higher than commercial banks’ since the firm offers business development services.
“There is cost that comes with that and that cost tends to increase the overall finance cost the entrepreneur pays,” he explained.
He said that they are challenged with limited knowledge of Rwandans about the work of fund managers,
“The other challenge is that people do not take time to do market research based business plans and some people do not know how to do their business plans.
We believe that with the coming of IFC SMEs Toolkit and business age we shall be able to overcome some of those challenges.