Despite the mining sector being the country’s second-largest export revenue earner, after tourism, miners still claim that banks shut them out on funding.

In 2019, statistics from the National Bank of Rwanda (BNR) indicated that exploration and mining activities in the country remain inadequately funded, with the mining sector continuously receiving the smallest share of loans from the banking system.

Four years on, the situation has not changed.

On Monday, December 5, during the launch of the fifth edition of Rwanda Mining Week, Jean Malic Kalima, Chairperson of Rwanda Mining Association, noted that the sector still lacks adequate funding to be able to maximize its potential therein.

"In most cases, mineral traders were able to get loans at low-interest rates but when it comes to those involved in mineral extractions and exploration, banks do not trust us with financing,” he said.

Kalima suggested that banks should look at the possibility of accepting miners’ licenses as collateral for approving much-needed loans.

He based this on the fact that the sector has witnessed growth in attracting local investors, changing the historical narrative that it was for foreign players only, and there is progress towards achieving value addition to exported minerals.

Figures from the Rwanda Mining Board indicate that the sector recorded export revenue rising from $373 million in 2017 to $733 million in 2020. However, there was a decline to $516 million in 2021 due to low prices on global markets. From January to September 2022, the sector has been able to generate $585 million in export revenue.

According to the Board, the mining sector contributed $1.6 billion to the economy in the past three years, leading to the socio-economic transformation of surrounding local communities by creating jobs, providing medical insurance schemes, and developing road network infrastructure.

As noted, when it comes to value addition, local refineries and gem-cutting facilities also contributed greatly to a significant increase in the value of Rwanda’s minerals and gemstones, as they are exported in refined and polished forms to countries in Europe, Asia, and USA.

However, the sector is still operating under capacity in terms of exploration, extraction, and processing where many losses are incurred due to the use of traditional techniques, among other reasons.

Yamina Karitanyi, CEO of Rwanda Mines, Petroleum, and Gas Board, called on stakeholders to support the growth and professionalization of the mining sector through appropriate funding for exploration, mining, processing techniques, and mineral trading which "entirely depends” on pre-financing from brokers.

This also puts into consideration the fact that the sector is transitioning from using artisanal techniques of mining to modern methods that require advanced and costly technologies.

Alternative financing

Teddy Mugabo, CEO of Rwanda Green Fund, noted that there could be alternatives.

She said: "We can come in to support in terms of new technologies and innovations linked to sustainability by providing guarantees to back them up. Other than that, we aren’t able to support the overall mining activities.”

Mugabo cited an investment facility created in partnership with Rwanda Development Bank to support players in the private sector to access blended finance.

The green investment facility has attracted investments worth $104 million (roughly Rwf109 billion) in its first capitalization to drive private sector ventures in climate-resilient projects.

Mugabo noted that from a financing perspective, people want to see that the project is bankable, to understand the risks involved and how they can be mitigated.

"There is also a need for miners to show the environmental, social, and governance part of their project,” she added.

The sector comprises 158 mining companies and 68 companies with industrial licenses.

The 3Ts – Tin, Tungsten, and Tantalum – are among major minerals found in the country. The latter are exported to different countries, such as Malaysia, Thailand, and sometimes China.

Rwanda also exports minerals to Austria, Hong Kong, Japan, and the US.

The country also exports gold, which is on high demand mostly in Europe and Arab countries.

Rwanda’s mining sector has adopted and integrated mechanized mining methods, as well as established a regional Geochemical Laboratory and accredited learning institutions dedicated to its mining eco-system.

The Regional Certified Geochemical Laboratory conducts analytical and research activities in the sector, with an aim to be a regional hub for mineral inspection, testing, and certification services.

The mineral testing laboratory aims to do sample analysis within the country instead of doing it outside, to accredit other laboratories, so as to cut down on analysis costs done abroad, and cut down on time taken to get the results, Roy Kankwansi, a geo-chemical expert, noted earlier this month.