Microfinance is an indispensable instrument for alleviating poverty in Rwanda. When used appropriately, microfinance can build the capacity of the poor masses to create employment and generate wealth in a sustainable manner. 

Through its revolving fund, the Development Bank of Rwanda (BRD), as the Rwanda’s Government investment arm, had already identified the refinancing and the capacity building for microfinance institutions (MFIs) as one of the main pillars that will support the development of the industry and boost MFIs operations and performance.

Since the Development Bank has Rwf15 million mark as the minimum amount it can lend to an individual or a company, it does not reach a certain category of potential clients’ mostly small-and-medium enterprises (SMEs), which equally invest in economically-viable projects but with small amounts of money. That is why microfinance refinancing is the best tool for BRD to increase its outreach to rural investment with more impact on both depth and width.

According to Benjamin Manzi, the Director of Investment at BRD, the bank focuses on amplification of its refinancing system through which MFIs have been financially empowered to facilitate SME growth, especially targeting women and youth.

"Refinancing MFIs primarily aims at rural development as per the second Economic Development and Poverty Reduction Strategy (EDPRS II) objectives. 

"The MFIs have contributed to the multiplier effect through financing micro-projects that promote value addition and generate revenues through taxes. They also increase employment, as well as entrepreneurship, which are in line with the Bank’s financing mandate” Manzi said in an interview with Business Times this week. 

Because of the nature of MFIs operations and lending, it is easier for them to extend loans (as small as Rwf100,000 or less) to micro-projects since the MFIs are located all over the country. 

Manzi added that since 2010, the bank has pumped over Rwf10 billion into refinancing MFIs, including Coopedu, Zigama CSS, Unguka Bank, Goshen Finance, Umwalimu Sacco, Agaseke Bank, Urwego Opportunity Bank, Letshego, CT Rusizi, and Sacco IndashyikirwazaMurunda in Rutsiro District, among others.

Samuel Munyankuburwa, the managing director of Goshen Finance, said they have been accessing credit facilities from BRD since 2010. 

"We look forward to continue growing our relationship with the bank. Their terms are easy to go with which enables us to borrow and pay without experiencing difficulty,” he said. 

Munyankuburwa said they were reviewing their current loan performance to see whether they can increase their portfolio in order to reach out to more financially under-served segments of the population.