The Swedish International Development Cooperation Agency (Sida) and the Development Bank of Rwanda (BRD) have signed two energy agreements guarantees that will see the bank lending to energy sector investors.
The signing ceremony was held Thursday at BRD headquarters between the Head of Development Cooperation at the Swedish Embassy, Mikael Boström, and the BRD CEO, Eric Rutabana.
The $ 40 million guarantee programme constitutes 50 per cent of BRD’s lending portfolio.
It aims at facilitating increased access to finance for small and medium sized private actors to support the development of affordable and clean energy solutions in Rwanda.
It is also expected to provide solutions to the constraints that the low access to electricity has on economic and social development.
"Sweden sees additionality in helping the borrowers in the renewable energy sector, which often lack the collateral demanded to access financing. This intervention can be viewed as strategic and catalytic for several areas identified for the Swedish development cooperation with Rwanda,” Boström said.
SMEs will be guaranteed as they make out a large part of the business in the Rwandan economy which perceives lack of access to finance as a main barrier to growth.
Furthermore, SMEs operating in the energy sector are pivotal for achieving the country’s target to substantially increase energy supply and access to achieve Rwanda’s electrification goal of 100 per cent by 2024.
Rutabana clarified that energy, specifically renewable energy, was one of the key priority sectors of BRD’s investments.
"Supporting increasing access to finance for clean energy is a crosscutting enabler for sustainable economic development, human health, equitable growth and quality of life for poor and vulnerable communities. This guarantee comes at the right time as BRD implements, on behalf of the government, the Renewable Energy Fund (REF) programme which aims at scaling up access to renewable energy across the country,” he said.
The guarantee shall be directed towards loans to the renewable energy sub-sector, and towards end users of renewable energy solutions, such as households and micro businesses.
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