Inspired by the success of Girinka, a national programme aimed at improving incomes among the rural poor by donating a cow to each family, the City of Kigali (CoK) has set up a fund to bankroll city dwellers that lack capital to start or expand their businesses.

Girubucuruzi, aims to support low income earners who have bankable projects with loans ranging between Rwf 500,000 (for individual projects) to Rwf 2m (for associations) payable in two years at an interest rate of five per cent per annum. Borrowers do not have to present collateral in order to access funds.

The programme is designed to boost working capital for small income earners who include street vendors with a view to eliminate street vending and idleness. It also seeks to challenge businesses with resources to support this category of people who cannot afford capital to start or expand their business to earn a living.

Street vendors have welcomed this initiative, saying that although they have what it takes to do business, their entrepreneurial growth has been hampered by lack of access to commercial loans. Banks require security guarantees for loans and often charge interest rates many small business owners cannot afford.

One such a person who could benefit from the fund is Jean Pierre Uwihanganye. Since 2005, the resident of Agasharu in Kinyinya Sector, Gasabo District has earned a living for his family of three by riding a taxi bicycle.

He managed to build a house and start another business of brewing local banana beer. Although the two businesses give him Rwf2,500 per day, he says he would be wealthier if he had capital to invest.

"If I had Rwf 500,000, I would connect electricity to my house, buy a fridge and stock beer and start a bar. This is a business I have dreamt about, but when I think about the cost I tend to give up on it,” he says.

For Mathias Uwihanganye, who repairs motor bikes on the roadside in Kimironko, opening up a shop for spare parts is his dream business that would lift his income from the current miserable Rwf1,500 a day. "I tried to borrow money from banks and they said that my business is not stable and reliable,” he said.

The same problem was highlited by food stuff sellers who welcomed the initiative.

"Fruits and vegetables are a good business in this city where people believe in a complete meal, but our business is stagnant because we invest little money and it all gets lost in taxes, rent and cleaning fees,” said Clarisse Mukamana, the president of Twiteze Imbere Gasabo, a cooperative of women who sell fruits and vegetables opposite Kimironko Taxi Park.

How it works

Girubucuruzi scheme that was launched on February 27 is for people with good business ideas, but cannot get funding. It also targets the youths who need startup capital.

The process involves the local leaders from the grassroots to the city mayor.

Applicants are required to submit their project plans to local leaders at the cell level, accompanied with a letter of confirmation from village leaders that the applicant is indeed poor, has a pending project and is an honest person who qualifies for a Girubucuruzi loan.

Successful applications are then submitted to the Girubucuruzi committee at sector level by the cell executive secretary.

The sector Girubucuruzi committee is comprised of the executive secretary and technical staff with development and social affairs background, and the manager of Umurenge Sacco.

This team examines the projects and submits them to the district committee, chaired by the mayor.

The CoK is in charge of policy and oversight role while Umurenge Sacco, is the financial institution that was contracted to give out loans.

PPP funding

According to a concept note from the CoK, "Girubucuruzi is a CoK initiative which seeks overall participation.”

The money will be raised from the civil society, private sector as well as CoK’s budget set aside to support entrepreneurs.

Individual entrepreneurs are also expected to contribute "whenever they believe they can give something to boost the capital of their colleagues who are still trying to find their way out of poverty.”

At the launch in Muhima Sector, Bruno Rangira, the CoK spokesperson said Rwf30m had so far been raised.

"As they responded positively in one cow per family programme, the Rwandan community will support this programme and it will bare fruits,” said Frederic Harelimana, the Muhima executive secretary.

Apart from cash, the Girubucuruzi encourages individuals and organizations to give products and services on loan.

Harelimana said that some wholesalers in his area had pledged support. One of them pledged 5,000 bags of cement to a cooperative that will commit to pay back after selling.

Muhima has also clinched a deal with Tigo, a telecommunication company, to support persons with disabilities by giving them airtime and cash transfer scheme — tigo cash — on loan.

The hospitality sector, said Rangira, is also ready to give money to fruit and vegetable sellers, on condition that they supply them the food stuff.

CoK has called upon more companies to contribute to Girubucuruzi.

The country has embraced different strategies like Kuremera and Hanga Umurimo and the recent Girubucuruzi of CoK to achieve the Second Economic Development and Poverty Reduction Strategy (EDPRS2), besides the ongoing Girinka.

EDPRS 2 seeks among others an economic transformation by increasing the GDP growth from 8.3 to 11.5 per cent by 2017, and the GDP per capita from $900 to $1240 by the same year.The strategy also targets productivity and youth employment by creating 200,000 off farm jobs per annum.