Supporting ideas and ambitions into tangible business entities through financial access

The Fiscal Year 2012 has been exciting for BDF, and we are proud to present the results. We have grown our guarantee portfolio successfully this year by 97%, stimulating cumulative loan disbursements worth over Rwf 40 Billion that small businesses need to fuel their growth and create jobs. BDF’s mission of supporting small businesses has never been more critical. Small businesses comprise over 90% of the country’s business enterprises as revealed by the 2012 Enterprise census. Yet despite their importance to the health of the overall Rwandan economy, many small businesses struggle to access the capital they need to start, grow and expand operations, and hire new staff. In 2012, BDF provided credit guarantees worth Rwf 6.8 Billion to 458 loans with cumulative credit guarantee approvals totaling Rwf 13.7 Billion to 584 loans at year-end channeled largely in support of agriculture. Similarly, RIF Grant disbursements for the year were Rwf 621 Million for 530 loans reaching a cumulative high of Rwf 802 Million to 712 loans. We achieved these results due mainly to the significant contribution of the public-private partnership under the Hanga Umurimo program which brought in 108 loans that received credit guarantees worth Rwf 1.3 Billion. During the year, we also worked to improve the guarantee processes to enhance their competitiveness and broaden our role in realizing a fair guarantee market share. In this regard, we overhauled the credit guarantee approval process, features and operating model in order to improve efficiencies and streamline activities while enhancing its attractiveness to the lending institutions. The changes introduced included: - the paradigm shift to provide guarantee risk coverage for both investment assets and working capital loans, - introduction of delegated authority and loan portfolio coverage for participating financial institutions, - the move from a uniform guarantee risk coverage percentage to a wider range that considers loan risk profiles and caters for special groups,-and the revision in the trigger point for claims to when a loan becomes non performing with a limited recovery period. Overall, these changes were all designed to encourage lending institutions to embrace the BDF guarantees and focus more on SMEs as the target borrowers. These steps have led to a vast improvement in utilization of the guarantees. 2012 was the first full year of operations for BDF and it has revealed the potential for continued growth of the credit guarantees. We have signed Participation Agreements with 200 Financial Institutions across the country i.e. 13 Banks, 6 MFIs and 181 SACCOs through which to deliver our products. We have also invested heavily in an improved data management system – VEGA Software, both to enhance our own underwriting processes, monitoring of beneficiary accounts, but also to provide management with timely reports to make more informed decisions. As part of BDF’s ongoing efforts to expand its reach and enhance access to capital, it introduced several new initiatives over the year and partnered with a number of Government Ministries and other institutions to design new product plans and their corresponding systems. Notably were the Women and Youth Access to Finance Program and the Quasi Equity product. This has helped BDF to diversify and broaden its product range to meet the diverse needs of SMEs while attracting more partners. This allows us to expand investment and financing to more small businesses in specific high risk sectors. These partnerships have become a source of funding to BDF as the majority of the funds for these initiatives are not subject to specified repayment terms and, de facto, represent contributions to the BDF capital fund. Thanks to our diligence in supporting small businesses, the Right Honorable Prime Minister Dr. Pierre Damien Habumuremyi accompanied by the Honorable Minister of Youth and ICT Jean Philbert Nsengimana visited BDF on the 19th April 2012. The background of the visit was the Prime Minister’s wish to hear about the company’s strategy to accelerate financial access to marginalized women and youth as a special interest group and also get an understanding of BDF opportunities and challenges. BDF won two awards in 2012. The “Best Financial Product Award” at the 1st Agri-Business Finance Fair in February 2012 that was organized by Agri-Pro focus in collaboration with the Ministry of Agriculture and the “Rwanda Youth Organizations Network Award” for creating a brighter future for youth. For 2013, we plan to help our government achieve its goal of creating employment. We will extend the scale of support for small business startups to access finance and to create and maintain jobs. We will concentrate a significant portion of the BDF resources on serving the poorer districts that were highlighted by the “Households Living Conditions Survey” (EICV3) to achieve balanced development. These districts are Karongi, Ruhango, Nyamasheke, Nyamagabe, Nyaruguru and Gisagara. We will also continue to support SMEs by providing business advisory and counseling services as a crucial way to increase their chances for long-term success. BDF will provide expert insight and guidance to women and youth on how to start, manage and finance their businesses. We shall partner with various stakeholders to deliver these services, whether it is to write a business plan, how to market, how to adopt technology for business benefits, how to handle tax or legal regulatory obligations, or how to run a business and improve efficiencies. We are looking forward to the year 2013 with a sense of hope. We will do everything possible to create an enabling environment that supports SMEs to access credit, and contribute to Rwanda’s economic development. We would like to express our sincere appreciation to the entrepreneurs, SMEs, financial institutions, and government authorities that have supported us, as well as all the staff at BDF for their assistance and cooperation in delivering these results. We would like to ask you to continue supporting BDF as we further develop into the leading Credit Guarantee Fund in Rwanda and earn the trust of the government and people of Rwanda. -- Beneficiaries speak out Humvumugabo Amiel My name is Humvumugabo Amiel, I do poultry in Kamonyi District. Before starting my project, I had constructed my chicken coop but did not have equipments and enough labour. I started asking for loans in different banks but it seemed hard to get a loan as I did not have enough collaterals to present. I later found out that there was a new company called BDF established to offer guarantees for one to get a loan for new projects. That is how I finally got a loan from BRD. Now, I sell eggs, chicken, and I also get money to pay employees. Thanks to BDF. Ngirishuti Ramazani I am Ngirishuti Ramazani. I live in Huye, in the Southern Province. I used to be a driver, transporting coffee from Gisenyi and Cyangugu. One day, after observing what people from those two areas were doing, it also occurred to me that I can utilize my land the same way. That is how I started growing coffee, but my standards were low because I didn’t have sufficient products; my labour as well as the methods were still poor. After a few months, I got to know BDF on how the company offers guarantee to SMEs, which got my attention and I decided to work with them. Now, my plantation is doing great and the people around are also benefiting from it; they got employment, they earn a living and have medical insurance. Currently, I have 20 permanent employees and 30 temporally. I do thank BDF for the support in helping me achieve my best.

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Supporting ideas and ambitions into tangible business entities through financial access