In May 2022, the Government of Rwanda launched the Economic Recovery Fund phase two (ERF2), also known as Hatana-ERF2, to encourage businesses to invest and contribute to the national economic recovery efforts post-Covid 19 pandemic. Hatana-ERF2 is currently financed by the World Bank and the Asian Infrastructure Investment Bank (AIIB), and is implemented by the Development Bank of Rwanda Plc. (BRD) and the Business Development Fund (BDF). Hatana-ERF 2 has total funding of $257.50 million, of which $10,161,645 has already been committed by Small and Medium Enterprises. Businesses in the sectors of textile, manufacturing, other light manufacturing sectors and agro-processing, along with their linked value chains are targeted under the investment window of this fund, with the following conditions: Businesses with an annual turnover of less than FRW 500 million are eligible to a Hatana loan not exceeding FRW 500 million, at an interest rate of 8%. Businesses with an annual turnover ranging between RWF 500 million and RWF 1 Billion are eligible to a Hatana loan not exceeding FRW 2 Billion to be mixed with their own bank’s funding; this means that they can access 60 % of their loan at 8% (under Hatana) and the 40% remaining at their bank’s commercial interest rate. Hatana offers a repayment period of up to 15 years, and a possible grace period of 3 years. The grace period is useful to cover the initial investment period when the business activities have not yet picked up to generate sufficient cash flow to pay back the loan. However, it is always financially advisable to start paying back the loan (both interest and principal) as early as possible to avoid accumulation of interest payment which ends up being more costly for the business owner. The current engagement with SMEs on access to finance indicate a few key challenges that Hatana is addressing. One such issue is the lack of sufficient collateral for young people, women, and SMEs. They expressed hesitation to submit an application for the loan, not because they did not need it, but rather due to concerns over their lack of collateral. Could this situation be resolved in any way? According to Kayonde Richard, a BRD investment officer for this project, there is in fact a way out. BDF provides a collateral guarantee which covers up to 50% of the loan for SMEs clients and offers 75% coverage for youth- and women-led businesses, this truly makes this fund unique. This should motivate our entrepreneurs to think about starting or growing their businesses with Hatana. Hatana is primarily available for all loans sizes through Bank of Kigali, I&M Bank, BPR Bank Rwanda, Equity Bank Rwanda, Bank of Africa, GT Bank Rwanda, Cogebanque, RIM Microfinance, NCBA Bank and Ecobank Rwanda. It is also available directly through BRD for loans over FRW50 million. Hatana- ERF2 can also be accessed through BDF for collateral guarantee coverage. Further information can be found at the site hatana.brd.rw. Terms and Conditions apply.
