Bad loans among small-and-medium enterprises (SMEs) could reduce after a local comercial bank kick-started a training programmes in financial management for business operators across the country.

The first such training workshop attracted 35 SME operators on Tuesday. The programme is being conducted by KCB Bank Rwanda and supported by the European Investment Bank (EIB).

Justin Nkusi, the KCB Bank senior manager in charge of SMEs and agribusiness, said the training was also geared at equipping SMEs with knowledge on how to acquire and manage loans.

"It is also aimed at equipping SMEs with skills on how to prepare bankable projects to attract funders,” Nkusi said.

He said the programme supports government efforts geared at supporting the SME industry. He noted that SMEs play a significant role in the development of any country.

Nkusi explained that the training is part of a €6 million (Rwf4.9 billion) agreement signed between EIB and KCB in 2013 to fund SMEs and micro-borrowers.

He said the programme will be conducted in phases across the country, with the next phase of training scheduled to be held in Rubavu and Huye districts later in the year.

Guillermo Bosse, EIB’s regional team leader, urged banks to help build capacities of smallscale businesses to make them creditworthy.

"There is need to create trust between banks and SMEs, as well as improving funding to small businesses, which will, ultimately, grow both sectors,” Bosse told The New Times on the sidelines of the training in Kigali on Tuesday.

Gerald Gatete, the managing director of Regus Limited, spoke of the need to continueously improve the capacity of SME operators to facilitate the sector’s growth.

He, however, expressed concern over high interest rates and other charges levied by banks.

According to the central bank 2014 monetary policy and financial stability statement, the total loans given to SMEs rose by 19 per cent last year, to Rwf229.9 billion from Rwf193.2 billion in 2013. The number of loans increased by 89.5 per cent from 25,395 in 2013 to 48,115 loans last year.

SMEs located in City of Kigali accounted for 67.9 per cent of the total loans disbursed to SMEs, followed by the Eastern Province with 10.9 per cent.

Over 7.5 per cent of the loans were given SMEs in Western Province, while those in Southern Province acquired 7.27 per cent of the loans and 6.4 per cent was given to those in the Northern Province.

KCB is targeting to increase its SME portfolio from the current 7,341 customers, with a deposit of about Rwf18 billion, to more than 10,000 customers by the end of the year. The bank’s total loan portfolio to the SME sector currently stands at Rwf8 billion. This is projected to grow to Rwf13 billion by end of 2015, according to Nkusi.

business@newtimes.co.rw