Women and youth are eligible to access collateral of up to 75 per cent from Business Development Fund (BDF). This is meant to encourage loan banks and other financial institutions  to lend money to the youth and women in order to support their business initiatives.

Whereas this is a sound move in tackling the ‘access to finance’ challenge, obstacles prevail in accessing these services. 

A number of beneficiaries decry the bureaucracy involved saying that there are countless conditions and paper work attached to the process which makes it hard to access the services.

Moreover, those who succeed with the process meet other challenges that include delays in money disbursements, and that this leads to a holdup in the operation of their businesses.

Regis Umugiraneza the Co-founder and Director at Carl Group, says it took him a year to access the loan he had applied for. He was seeking a loan to advance his business by buying more equipment but unfortunately this never happened as fast as he thought.

He notes that the institution delayed with reasons of some policies that were in the pipeline to be changed.

Umugiraneza observes that a fault in the systems could be one of the reasons for the frequent delays.

"BDF managers on the district level confuse clients; they do not understand their products and the process. They are not well equipped to explain someone’s project and consequently some projects are rejected,” he states.

He therefore says such kinks should be worked upon because in the end it is the country’s development that is being held back.

"When businesses are not running as smoothly as they should, the country loses. It increases the unemployment rate, people can’t pay taxes. It affects development and economic growth because we cannot progress on a speed the government expects,” he adds.

Omar Muhoza also sought BDF services. He too recalls the process to be a long and draining one. It took him six months to access the loan.

"BDF helps us in many ways but imagine six months waiting and struggling to get a loan, some people find that very difficult and choose to quit,” he says.

Need for decentralised services

Muhoza is hence of the view that the institution decentralises its services noting that it will facilitate proper management of tasks and reduce on the time people take to get services and that other costs like transport will be reduced.

He also says that there is need to set a clear list of requirements beforehand for every category instead of changing them every day.

"With this, someone who wants a loan will try to fulfil those requirements before and that will decrease the time it may take. Another thing is that BDF should try to give timely feedback on proposed projects,” Muhoza suggests.

Umugiraneza on the other hand says the institution’s personnel must be well trained in order to give accurate information and also give proper awareness on the products and processes; this will spare various stakeholders from misperception.

He also believes that clients should be given the chance to explain their own projects to the responsible parties. "I think it is good for clients to explain their projects because sometimes BDF managers fail to understand those projects and fail to present them accurately yet it affects clients when their projects are rejected when they were eligible,” he adds.

A way out with digitalisation

Denise Tuyishime, the Public Relations and Communications Officer at BDF explains that the bureaucracy involved in servicing their clients is called for since there is need for accuracy especially when it comes to the documentation from the side of clients.

Because they don’t deal with the client directly, it is often a cycle where in case of any modification in details, the institution has to talk to the bank and the bank then goes to the client, making it an even longer process.

However Tuyishime says this is done mostly because they have to ensure that they get everything right.

"Every single service has its own requirements and these need to be proper and accurate; this is why we need to take ample time for us to have suitable records,” she says.

"We receive a lot of applications that also take some time to reach us from the bank. From the time we get it there are different stages we have to go through, for example reviewing, meeting with the investment committee, all of this requires time,” she adds.

Tuyishime reveals that the institution would also want to have a process as swift as most wish however they are yet to get there.

"Yes we used to have delays but we are now working towards improvement. We set up a web application and now the process is at least taking a month. This app is helping us a lot because now with every project that comes to the banks, all they need is scan and send the documents to us immediately,” she explains.

And because some clients have ended up defaulting, the process is here to limit such risks, we should be able to track this hence the need to make sure that we are dealing with the right information, she says.

With this, Tuyishime calls onto people to understand how BDF works because some don’t pay back their loans mistaking them for grants.

She also points out that they are working on bringing in more products to make this process easier.

"Our web is in place but it is still developing for example, we want our clients to be able to track the progress of their projects from where they are, because now it is us and the banks that can access this information on this web. I am sure with digital technology things will change for the better.”

editor@newtimesrwanda.com