The Central Bank has issued guidelines for the Economic Recovery Fund estimated at over $200 million (approximately Rwf186bn) aimed at supporting local businesses that are hardest hit by the coronavirus pandemic. The regulator has released a directive on the operationalization of the fund to all the 16 local banks as well as Limited Liability Micro-finance institutions. The fund will be managed by the Central Bank and disbursed through local financial players. The fund which is estimated at over $200 million (approximately Rwf186bn) with the government injecting aninitial $100M is aimed at supporting local businesses that are hardest hit by the coronavirus pandemic. The Economic Recovery Fund will support businesses under three key windows; Hotel Refinancing to enable the restructuring of loans held by hotels; Working Capital for businesses most affected by COVID-19 to keep them operational and avoid lay-offs; Micro-business loans for SMEs and Micro-businesses affected by COVID-19. Businesses to benefit from the fund will among other things be accessed on the basis of their financial health prior to the shock such as no concerns raised in previous external audit reports or no pre-existing threats to future cash flows. According to a concept note of the fund seen by The New Times, the fund will be managed by the Central Bank which will lend to banks for the purpose of lending to borrowers. Applications will be made through respective banks which will conduct a case by case debt sustainability assessment. Banks will then submit the applications to the Central Bank for review leading up to the final approval. On approval, banks will disburse the funds to a borrower’s account then submit proof of the disbursement to the regulator who will then credit the Bank’s account with the disbursed amount. The funds are for all categories of businesses, from Micro-businesses, SMEs to large corporations.
