TOP STORY: IFC calls for micro leasing in financial institutions

The volume of leases by mid 2008 was $25 million, a growth of over 100 percent as compared to 2007. The International Finance Corporation (IFC), a member of the World Bank group that invests directly in companies and guarantees loans to private investors, has called upon financial institutions to embrace micro leasing for Small and Medium Enterprises (SMEs) development. According to Brian Kirungi, IFC’s Team Leader and Legal Specialist, micro leasing would reduce current barriers affecting those that have little or no access to finance. “This makes it possible for micro and small businesses to establish or expand their businesses,” he explained during the micro leasing awareness workshop held at Laico Hotel on Tuesday. The workshop was organised by the Association of Micro Finance Institutions (AMIR) in collaboration with IFC-Rwanda Leasing Development Programme and the Rwanda Development Board (RDB). Kirungi said that Micro Finance Institutions (MFIs) are better placed to offer micro leases due to their presence in rural areas. The AMIR Chairman, Faustin Zihiga, explained that micro leasing would improve operations of MFIs. “It is another level of micro financing,” he said. Atete Rugege Karimba, the IFC’s Leasing Programme Operations Analyst, explained that micro leasing is more affordable for the poor and a more effective way of giving finance. “On average, a micro lease would range between Rwf75,000 – Rwf2,500,000. In case of an asset, it gives people with little or no property an opportunity to own an asset that can be used as collateral.” The maximum value for micro leasing (Rwf2.5 million) is the minimum value for leasing. Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments. The volume of leases by mid 2008 was $25 million, a growth of over 100 percent as compared to 2007. Started in 2006 by Commercial Bank of Rwanda (BCR) and Fina Bank, the initiative has attracted other financial players. Some of the latest entrants are Ecobank, Cogebanque and Vision Finance Microfinance. This follows the introduction of an association dubbed, ‘the Rwanda Leasing Association,’ to promote and strengthen leasing in the country. It was formed by IFC in collaboration with BCR, Fina Bank and the Development Bank of Rwanda (BRD). Ends

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TOP STORY: IFC calls for micro leasing in financial institutions