BRD earmarks Rwf  2.5b to support SMEs

It was reported in the week that Rwanda Development Bank (BRD) is in the process of setting up a Rwf2.5b "SME Development Fund” in a move that will make it attractive for financial institutions to increase lending to Rwanda’s Small and Medium Enterprises (SMEs).

The fund comes at a time government has adopted an SME policy that will provide a mechanism for facilitating SMEs to access appropriate business financing.

In an interview with Business Times, Jack Kayonga, the Managing Director of BRD said the Fund through which BRD will provide aguarantee of up to 50 percent of the loan for an SME and Rwf100million per SME or individual, will also be supported by government.

"Government is bringing in various funds such as the Agriculture Guarantee Fund. We are finalizing the documents and we intend to have it functional by beginning of October,” Kayonga said.

EAC Moves to address Illicit Trade

Amid reports of increasing illegal trade in the East African Community (EAC), the region’s private sector authorities are in the process of setting a roadmap that will facilitate combating the vice, according to press reports this week.
Through their umbrella organization, the East African Business Council (EABC), authorities are now organizing a meeting in October in the Kenyan capital of Nairobi to come up with a plan of action needed to combat the vice.

The multifaceted problem includes acts of; selling counterfeits, smuggling and under-declared locally produced goods among others.

According to a press release from the EABC, the meeting will come up with policy reforms and recommendations to address the current weak or non-existent legislations to deal with illicit trade.

"The profitability and market share of EAC companies, especially those involved in manufacture of fast moving consumer goods have been negatively affected by counterfeits and pirated products,” said Agatha Nderitu, the Executive Director of the Council.

Credit grows as banks concentrate on recovery of bad loans

Commercial banks are continuing to hold on to their cash; despite having enough liquidity to lend Business Times has learnt.   

While credit to the economy has significantly increased with the volume of new authorized loans in first half increasing by 45.5 percent from Rwf 83.8 billion to Rwf 121.9 billion, outstanding credit to private sector has only increased by 3.9percent against 6.7 projected. 

"Overall, a current increase in monetary aggregates remains moderate, giving room for further credit expansion for the second half of 2010,” the  National Bank of Rwanda(BNR) said this week in its latest Monetary and Financial Stability  Report.

This follows implementation of different measures by the Central Bank and government since mid last year, allowing banks to significantly rebuild their liquidity conditions and lending capacity.

To ease credit conditions while keeping interest rates positive in real terms, BNR twice reduced its key repo rate – the rate at which it lends to commercial banks from 9 percent to 7.5 percent in December last year, and to 7 percent in March this year. BNR has gone ahead to keep it unchanged for the third quarter.

"The increase [in loans] is moderate, but combined with our low inflation there is room for further expansion. This is a strong message to the banks to do more than they have been doing to distribute more money into the economy.” Francois Kanimba was quoted as saying.

In addition, this reduction in the cost of funds for commercial banks is expected to be transmitted in credit markets by lowering bank’s lending rates.

SAA seeks to resume codeshare with Rwandair

South African Airways (SAA) is contemplating a move to restore codeshare flights with RwandAir (WB), an official from SAA has said.

SAA Head of Group Corporate Affairs, Fani Zulu, told Business Times in an email interview that SAA’s partner airline, SA Express (SAX), has applied for the rights to operate the Johannesburg-Kigali route.

SA Express forms part of the strong South African Airways alliance. The airline is operationally independent of SAA. Its flights are incorporated within the alliance and the airline uses SAA reservations and check-in facilities.

RwandAir’s CEO, Rene Janata confirmed that a codeshare deal between the two airlines was possible but he declined to divulge the details. 

RwandAir also has Interline Agreements with Kenya Airways, KLM, SN Brussels, Air Tanzania, Precision Air, and Ethiopian Airways.

Rwanda Transit Cargo at Mombasa Port on the Rise

Rwanda-bound cargo handled by the Mombasa Port is registering positive growth this year, after dropping by 14 percent last year, a top official at Kenya Ports Authority (KPA) has said.

Rwanda which accounts for 5 percent of the transit cargo at the port had its exports, in particular, sharply reduced from 16.8 million tons in 2008 to 14.4 million tons in 2009.
Imports also reduced from 276.6 million tons to 236.0 million tons in the previous year.

In an interview with Business Times on Tuesday, William Mtengo the KPA Resident Representative for transit countries; Uganda, Rwanda and Burundi pointed out that cargo had in general significantly improved reflecting the recovery of various economies in the region from the global recession.

"Rwandan cargo had undergone a slight dip and this was attributed to the post-election violence in 2008. However the situation has stablised and we have seen an impressive upsurge of imports into the region, and this should have a positive impact,” he said.

Mtengo also mentioned that KPA is participating in the ongoing international trade fair (EXPO) to facilitate their clients as part of Port’s wider plans to improve the efficiency of its operations.

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