Access to finance is still a big challenge that’s affecting growth of many small and medium enterprises (SMEs) and threatening their survival, due to banks’ reluctance to fund them, businesses said.

Speaking at a thematic SME forum in Kigali on Thursday, business operators expressed frustration with banks.

Ernest Ngendahayo, a business operator, said he failed to bid for different tenders after banks he approached could not approve his loan application in time.

"Banks are reluctant to lend us money in time when we want it. This pushes many business individuals to take risk of borrowing money from informal lenders at high interest rates so our businesses can survive,” Ngendahayo said.

"I always attend forums like this but nothing is changing. This should be different,” he added.

The forum was organised by the Ministry of Trade and Industry, in collaboration with Access to Finance Rwanda (AFR), under the theme, "Transforming SME finance in Rwanda.”

It served as a platform through which all stakeholders from private and public sectors, civil society and SMEs came together to discuss issues facing SMEs’ and propose possible solutions.

It broke down the financial barriers for SMEs, highlighting the intervention of stakeholders in unblocking those barriers, appropriate strategies and implementation plan to boost SMEs competitiveness and development.

According to the 2014 Business Establishment Census report by the National Institute of Statistics of Rwanda (NISR), micro, small and medium business community occupy 98 per cent while large businesses stand at only 2 per cent.

Surprisingly, SMEs contribute only 41 per cent in terms of creating jobs in private sector, due to several challenges that slow down the rate at which SMEs can impact on development in Rwanda.

Challenges

Some of the challenges raised during the forum include lack of improved business management skills, limited access to finance, limited access to markets and market information and new technologies used to increase their business productivity.

Germain Niyomutabazi, the entrepreneurship development policy specialist at the Ministry of Trade and Industry, said they hoped to bring together small and medium investors with financial institutions to understand how to address their financing issues.

"Our country cannot reach its development target when we are not putting a lot of efforts in SMEs, both technically and financially, yet they occupy a big part in the country’s business community. We want to make them more productive and creative in terms of job opportunities,” he said.

Niyomutabazi said the forum was an effective strategy to bring together SMEs and financial institutions to share ideas and propose financial services.

He added there is a political will to promote SMEs by improving technical support delivery to help them improve the quality of their products so they can compete on the international market and satisfy market demand.

According to Business Development Fund (BDF), 25,482 projects were approved by banks during the last five years, with a total of over Rwf147 billion loaned on those projects.

Albert Mugisha, the BDF relationship officer, said that, despite a standing agreement with participating financial institutions on supporting SMEs, banks are independent commercial bodies that have the last word on their money.

"Whether a project proposal has to be approved or rejected depends on the bank because it is their money, we only make sure they are comfortable with the projects. What we do is provide to technical support to business people in designing a successful project that banks can be convinced to finance,” he said.

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