Rwanda’s Business Development Fund (BDF) has urged tailors, fashion designers and traders in locally made clothes to make use of the existing opportunities in working with financial institutions and benefit from the BDF guarantee fund.
The call was made by Carine Sandrine Mugwaneza, the Marketing and Relationship Manager at BDF, during the ongoing one-month countrywide campaign targeting busy trading centers.
She was speaking last week while addressing stakeholders in the Made-in-Rwanda apparel industry who were exhibiting their products in the Car Free Zone in downtown Kigali City.
"We have been approaching business people in the local apparel sector to enlighten them on how they can access to financing through financial institutions and that we are ready to provide a guarantee fund for those who do not have collateral,” she said.
BDF works with the financial institutions namely banks, Microfinance Institutions and Savings and Credit Cooperatives to cover a between 50 per cent and 75 per cent of collateral required by the lending institution.
The maximum guaranteed amount is Rwf500 million for Agriculture project and Rwf300 million for other sectors within a maturity period of 10 years.
Those who are eligible for the support are Micro, Small & Medium Enterprises (MSMEs), individuals, associations, cooperatives.
So far 26,000 projects have been supported to the amount of Rwf150.4 billion.
"For youth and women projects, we cover 75 percent of collateral required by the banks. We are explaining to people about BDF services, the process that they can go through to be able to work with financial institutions and we cover their required collateral. We launched the campaign about guarantee because we realized that many people are still unaware of such opportunities,” Mugwaneza explained.
She added that their interest in business people dealing in the clothing industry was because they make a major contribution to the implementation of Made-In-Rwanda initiative as the government seeks to reduce the import bill and in the process of phasing out second-hand apparel.
"We have to promote local manufacturing by easing access to finance for the entrepreneurs. That is why we targeted the exhibitors of locally made clothes,” she added.
The government is in the process of drawing up a strategy to develop the textiles, apparel and leather industrial sectors. It is estimated that, if everything goes as planned, it could create 25,655 jobs, increase exports to $ 43 million and decrease imports to $ 33 million by 2019 (from $124 million in 2015).
The impact on trade balance will result in savings of $ 76 million over a three-year period. In 2016, Rwanda increased taxes on used clothes from $0.2 to $2.5 per kilogram, while taxes on used shoes increased from $0.2 to $3 per kilogram.