FEATURED: BPR Bank, Denmark launch $5.6m credit guarantee to support MSMEs

BPR Bank, in partnership with the Government of Denmark through the Investment Fund for Developing Countries (IFU), has launched a $5.6 million credit guarantee initiative aimed at enhancing access to financing for Rwanda’s Micro, Small, and Medium Enterprises (MSMEs). The portfolio guarantee facility, launched on December 3, is designed to provide loans with up to 70% of the required collateral covered, significantly reducing financial barriers for MSMEs. This innovative scheme, the first of its kind by IFU in Africa, targets critical sectors such as agriculture, tourism, renewable energy, ICT, logistics, and enterprises owned by women and youth. ALSO READ: BPR Bank Rwanda, IFC partner to support SMEs with Rwf53bn investment Patience Mutesi, Managing Director of BPR Bank, highlighted the pivotal role of MSMEs in Rwanda’s economic development. “The reason why this partnership is really important is that, as BPR, we believe that for this country to attain economic growth, SMEs need to be at the centre to drive this growth and job creation,” she said. Access to finance remains a key challenge for many businesses, often due to insufficient collateral. Mutesi explained that the guarantee scheme addresses this by mitigating risks for lenders. “The portfolio guarantee allows us to take the risk on the businesses without risking the money never coming back. It provides collateral for SMEs, covering up to 70 per cent of the security required for loans,” she explained. As an example, Mutesi noted that an agricultural SME seeking to adopt advanced technology can access funding under the scheme with only 30% of the typical collateral required. ALSO READ: BPR Bank Rwanda engages entrepreneurs, empowers SMEs with key financial insights Beyond financing, BPR Bank also offers tailored advisory services to businesses. Mutesi outlined various financing options available, such as asset-based financing, commercial mortgages, working capital loans, and collateral management. The bank also offers business support services to help businesses improve their proposals and strengthen internal structures. Ole Thonke, Undersecretary for Development Policy in Denmark, said, “Many SMEs haven’t grown enough to have sufficient collateral, making it risky for banks to lend to them. This guarantee replaces the collateral they lack, enabling BPR to open loans for SMEs to invest in new equipment, drive innovation, and create jobs,” he added. Thonke noted Rwanda’s favorable business environment and its reputation as one of Africa’s best countries for ease of doing business, describing the partnership with BPR as a natural choice. Denmark’s approach to this initiative goes beyond traditional financial returns. According to Thonke, the focus is on the developmental, economic, and social impact of the loans. “What is great about this partnership is that Access to Finance Rwanda (AFR) can step in to help SMEs mature and become eligible for BPR loans under the guarantee scheme,” he added. Bosco Iyacu, CEO of AFR said that businesses often face challenges accessing capital, despite the availability of funds in financial institutions. Addressing this gap, AFR launched the ‘Terimbere MSME Support’ facility, an initiative aimed at preparing enterprises to meet banks’ lending requirements and facilitating access to financing for growth and job creation. “Our mandate is to act as a market catalyst, ensuring financial services are accessible to as many businesses as possible, leading to job creation and improved livelihoods. “Currently, we are piloting with 10 businesses, and in the next five years, we aim to reach 5,000,” Iyacu said. He added, “Through this partnership with BPR and Denmark, we will ensure tracking its impact on employment creation, particularly for youth, and ensuring it reaches those without initial capacity.”

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FEATURED: BPR Bank, Denmark launch $5.6m credit guarantee to support MSMEs