The Lower Chamber of Parliament on Monday, December 23, authorized the ratification of draft laws approving $255 million financing agreements (over Rwf353 billion) between the Government of Rwanda and the World Bank’s International Development Association (IDA). Signed in Kigali on December 21, the agreements secured a credit for Rwanda's second programmatic development policy focused on advancing green finance, investment and trade. ALSO READ: How could Rwanda unlock more green financing? The Minister of Finance and Economic Planning, Yusuf Murangwa, who presented the draft laws to Parliament, said the agreements include $10.8 million under Credit A, $118.2 million under Credit B and $126 million allocated to promoting green finance, investment and trade initiatives in Rwanda. Murangwa said that the loans will primarily support the National Strategy for Transformation (NST2) and align with Rwanda's goals of achieving upper-middle-income status by 2035 and high-income status by 2050. ALSO READ: What Rwandan SMEs expect from $10bn AfCFTA Fund in 2025 Repayment terms Minister Murangwa further explained that Credit A will be repaid over five years with a seven-year grace period, while Credit B will be repaid over 39 years with an 11-year grace period and both credits carry a zero per cent interest rate. The third credit will be repaid over 28 years with a six-year grace period at an interest rate of 2 per cent. All credits aim to tackle challenges in green finance, investment and trade. Citizen concerns raised by MPs MP Jeanne d'Arc Debonheur highlighted the desire for a dedicated green finance fund with lower interest rates, small and medium enterprises and farmers. In response, Minister Muranga clarified that initiatives already exist allowing SMEs and farmers to secure loans through commercial banks at reduced interest rates of 9-10 per cent. ALSO READ: Unpacking Rwanda’s five-year development strategy: Here are the 14 goals Future strategies on advancing green finance, investment and trade Exports of goods and services grew from $1.9 billion in 2017 to $3.5 billion in 2023 during the NST1 period. However, the current account deficit widened from 9.5% of GDP in 2017 to 11.8% in 2023 due to higher import demand and external and climate-related shocks. Under five-year NST2, growing exports is a key focus to reduce the trade deficit. ALSO READ: NST1: How has Rwanda fared in achieving seven-year plan? NST2 aims to improve citizens' incomes and well-being by enhancing climate resilience, developing domestic manufacturing, boosting exports, and creating decent jobs. The government targets an annual GDP growth rate of 9.3 per cent from 2024 to 2029 with per capita income rising to $1,369. To sustain growth, total investment is expected to reach 32 per cent of GDP by 2029, driven by private investment, which is projected to grow from $2.2 billion in 2023 to $4.6 billion. Efforts to mobilize savings through a business-friendly environment and an efficient financial sector aim to increase the national savings rate from 12.4 per cent in 2023 to about 26 per cent by 2029.
