BDF takes services to rural areas

A call that started at the 2012 national dialogue (Umushyikirano) is finally yielding results with Business Development Fund (BDF) set to have a branch in all districts across the country. In 2012, a participant attending the annual National Dialogue raised a concern that BDF was too centralised that it lacked a presence in the countryside, making it hard for rural folks to access its services. The call was taken up by the National Leaders’ Retreat, last year, during which officials agreed that the country’s only guarantee fund should be decentralised. “We have seven branches already in operation in seven districts,” Innocent Bulindi, the BDF chief executive, said. In an understanding between BDF and Rwanda Development Board (RDB), the Fund would take over the 30 Business Development Centres (BDCs) located at the district level. The pilot phase, aimed at testing how the new decentralised system would work, was done with BDCs located in the Western Province districts of Ngororero, Nyabihu, Rubavu, Rutsiro, Karongi, Nyamasheke and Rusizi. “Now we expect to open 10 more to make 17, the total number of our district branches, by the end of the year,” Bulindi said. The 10 districts set to have BDF branches include Kayonza, Gatsibo, Rulindo, Nyanza, Rwamagana, Ngoma, Nyagatare, Gicumbi, Huye and Nyamagabe. BDF pledged to use the facilities to enable rural people access financial services, extend business development services and help at least 7,000 small entrepreneurs to obtain credit by the end of June 2015. BDC facelift BDCs were formed in 2011 on a public-private partnership (PPP) model in which government, represented by RDB, retained ownership of the centres’ assets but with the private operators assuming responsibility for operational costs. Before the takeover, the centres were being managed by four private operators whose management contracts have since expired, Bulindi said. With the management overhaul involved, BDF will be hiring to fill up the 30 district branches. The Fund’s chief executive told The New Times that they need at least 120 people to fill up various positions, including that of station managers and coordinators. BDCs taught people how to start and grow businesses with ethical values as well as learn basic ICT skills such as opening e-mail accounts and using the Internet to access market information. BDF will take over that role and introduce more services such as equipping aspiring entrepreneurs with business development skills like planning and budgeting but at a cost that will vary from district to district. “This is aimed at reducing bad business cases that have been going to banks ending up being rejected,” Bulindi said. The idea is that with well developed business proposals, BDF can help introduce clients to partnering banks with less chances of rejection. Each district branch will be run by a team of four persons. Broad menu BDF also revealed that it will be broadening its services to offer Rwandans an array of products in a bid to ease and increase financial access for SMEs. The guarantee fund has been divided into four categories, such as the agriculture guarantee fund targeting productive projects in the agricultural value chain, SME guarantee fund aiming at guaranteeing loans issued by participating financial institutions, and women guarantee fund aimed at promoting women and retrenched civil servants’ guarantee fund. The New Times understands that at least 2,006 loans have been guaranteed for up to 75 per cent as of June 2014, worth Rwf23 billion, and helping stimulate bank loans worth Rwf60 billion. The maximum amount guaranteed by BDF is limited to Rwf500 million per SME guaranteed for up to 10 years. BDF has added more products, including a grants fund, Sacco refinancing and a quasi equity fund. The $10 million grant is called the Second Rural Investment Facility (RIF2) availed by the Ministry of Agriculture and Animal Resources. Officials say it’s aimed at providing incentives for both financial institutions and for entrepreneurs to make productive investments in agriculture. About 3,111 entrepreneurs have received grants worth Rwf1.4 billion as of June 2014. Grant beneficiaries receive a certain portion of an investment loan taken to fund projects that represent investments along the agricultural value chain. According to Trade and Industry minister Francois Kanimba, Saccos have a liquidity problem which is mainly caused by the nature of their deposits. Depositors save money only to withdraw shortly, affecting operations. “So our refinancing product is basically to address that problem by ensuring that Saccos, which are the closest to most citizens, stay with liquid,” says Bulindi. Under Quasi Equity funding, BDF will be buying stakes into what they deem to be good projects that can’t find funding from banks or struggling to repay an expensive bank loan, in which case they would help buy out the debt and give the distressed firm relief to recover under a flexible repayment arrangement. BDF has already invested more than Rwf436 million in at least 17 SMEs. The cost implication of decentralising BDF is an annual budget of Rwf7.2 billion each year for the next five years up to 2019. Bulindi says government has committed to provide the money. Mary Nyirakadari, a member of a women’s handicraft association in Ngoma District, said she hopes to benefit from the district branches because many of their ideas have stalled because of financial hardships.