Development Bank of Rwanda has relaunched the Export Growth Fund (EGF) in a new gear of competition for finance to stimulate and support the growth of export-oriented businesses in the country by addressing common challenges faced by exporters.

It is part of the bigger strategy to narrow the trade deficit, which stood at 20.7 percent in 2022.

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Established in 2015, the EGF sought to address generic constraints to exporters such as limited access to finance (in form of high costs of borrowing, limited post-shipment financing), low production volumes, high international market entry related costs, and generic loans backed by solid collateral.

It provides financing to exporters through four windows: the Investment Catalyst Facility, the Matching Grant Facility, the Export Credit Insurance Guarantee Facility, and the Industrial Start-up Facility.

Under the Investment Catalyst facility, BRD provides direct lending with an interest subsidy of 10 percent on a maximum financing amount of Rwf1.5 billion as a means of encouraging private sector investment in export-oriented production.

The Matching Grant Facility allocates a $100,000 grant presumed 50 percent of an exporter’s total market development budget to help them enter the export market by reducing costs when adjusting to standards and other technical requirements in target markets.

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On the other hand, the Export Credit Insurance Guarantee Facility offers transaction-related guarantees of up to 80 percent of capital given by commercial banks. However, the facility is not intended to be a means of financing start-up capital but rather to enhance the financial capabilities of exporters by providing credit insurance for pre-shipment and post-shipment finance.

The Industrial Start-Up Facility encourages private sector investments to set up new businesses that recapture domestic markets and promote export-related activities, with a financing of up to Rwf1.5 billion.

These businesses should have direct import substitution effects with innovation, development, and commercialization of new products and services driven by technology.

As of March 2023, it has funded at least 170 projects through direct lending windows of grants and interest subsidy, and 72 projects through on-lending.

Kampeta Sayinzoga, the CEO of BRD, noted that the competition aims at giving a boost in the uptake of the fund given that it had only given out Rwf25 billion over the past eight years, showing a reluctance from the private sector.

"We want to reach many exporters at an accelerated pace. This is an addition to the many initiatives we have to promote manufacturing and local value-addition as part of the country’s move to spur import substitution activities,” she added.

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Sayinzoga emphasized that applicants should heed the eligibility criteria for financing under all the four facilities which aim at ensuring business sustainability in the long run.

Thanks to knowledge and financing acquired through EGF, Daniel Muzungu, a businessman in the horticulture industry, secured a matching grant of more than 50 percent that enabled him to attend different expos, including the one in Thailand in May 2023, where he showcased his produce.

"These achievements have played a key role in smoothing my business journey and I am confident that even bigger things lie ahead. I encourage my peers to take advantage of this opportunity to grow and expand their businesses,” he added.

Jean Chrysostome Ngabitsinze, the Minister of Trade and Industry, said that they are embarking on a new campaign that will assess different challenges that exporters face - hindering them from leveraging the existing fund, and respond to them accordingly.

He noted that satisfying the domestic market goes hand-in-hand with increasing exports which in turn plays an important role in the economic stability of a country.

Rwanda has been consolidating efforts geared towards boosting the manufacturing industry through various incentives to spur value addition in local production and being competitive on international markets.

This is important in the context as the African Continental Free Trade Area is gaining momentum and Rwandan exporters need to be equipped with capacity to produce and export competitive products.

Exporters, export-oriented investors, startups, among other sectors, actively engaged in the export activities, are encouraged to apply for the EGF through corresponding banks including Bank of Kigali, I&M Bank Rwanda, BRD Rwanda, Cogebanque, Bank of Africa, and Umutanguha Finance.