The government of Rwanda through the Ministry of Finance and Economic Planning has signed an agreement to receive financial support from the European Investment Bank (EIB) as part of the Covid-19 recovery fund for Small and Medium businesses. The financial agreement signed Monday, October 25, will see the EIB consign €95 million (over Rwf110 billion) to Bank of Kigali (BK) and KCB Rwanda for proper allocation to different businesses as part of the economic recovery fund. The agreement entails that Bank of Kigali will receive €40 million, and contribute a matching €40 million while KCB will receive €15 million. According to officials, this is a loan that will be financed over a 7-year term. Rwanda is the first country to receive part of the €175 financial support from EIB for the East Africa Covid-19 recovery response facility. Uzziel Ndagijimana, Minister of Finance and Economic planning said that these lines of credit to the banking sector come to complement the government’s efforts to support businesses affected by Covid-19. The total amount of the Economic Recovery Fund established by the government to support businesses that were badly hit by Covid-19 will increase to $350 million by the end of this year, he said. The Fund is a two-year intervention designed to revive business activity and safeguard employment in the wake of the Covid-19 pandemic. Initially, the funds went to the hospitality sector loan refinancing, businesses in manufacturing (including agro-processing), transport and logistics as well as small and medium enterprises linked to domestic and global supply chains. Maria Shaw Barragan, Director of Operations, EIB said they chose Rwanda as the first country to receive the facility because of the demonstrated leadership of resilience and that they are ready to support other countries in accordance with their priorities. “We respond to demand from countries…our criteria include elements of sustainability, making sure that each country we are supporting is thinking of the generations of now but also of the future. They also have to be inclusive and well-aligned with the priorities of the country and European Union policies,” she said. This agreement is also intended to address the gender gap in economic recovery by allocating a minimum of 30 per cent of the total fund to female economic empowerment. Diane Karusisi, Chief Executive of BK said that this is the fourth facility they have secured in collaboration with EIB to support SMEs and they expect to spear and support growth and transformation in the economy but also, “in particular with women-led enterprises.” She also said that the transactions and accounts will be conducted in the Rwandan currency to facilitate the bank and the beneficiaries as well. On the other hand, George Odhiambo, Managing Director, KCB Rwanda lauded the pact that comes when the economy is opening up again and said they look forward to having the pre-2020 level of business vibrancy and growth. “In terms of operations and internal experience, we expect this to support our liquidity, balance sheet support, and the mismatch of facilities maturities which is very helpful for us,” he said. He added that: “Financing through the concept of mobilization in the local economy is normally short-term and we look forward to supporting the immediate term to six years of financing in businesses,” he said. The EIB is a long-term lending institution of the European Union and it has operated in Rwanda since 1977, providing more than €206 million for private and public investment across the country.
