The Development Bank of Rwanda (BRD) has urged Small and Medium Enterprises (SMEs)to tap into financing opportunities through the Export Growth Fund (EGF) expected to substantially boost exports and tackle trade deficits.

The call was made on Thursday as BRD launched one year campaign to improve EGF and raise the uptake of the fund among exporters in a bid to increase exports.

Held at Kigali Marriot Hotel, the launch of the campaign attracted participants from BRD management, partners and media to have an insight into the fund’s performance and available opportunities.

Supporting export development is one of the strategic interventions of BRD.

The bank plans to achieve it through the EGF initiative, the Rwanda Growth Anchor Initiative (RGAI), the establishment of Advanced Factory units& Special Economic Zone Infrastructure and the launch of a Technical Assistance Program.

In November 2015, the Government of Rwanda initiated EGF, a public fund managed by BRD to facilitate access to export and related funding.

SMEs involved in export sector or with export potential are targeted beneficiaries of the lending scheme channeled through financial institutions.

EGF falls under export promotion, one of the priority sectors of the economy at BRD. The other key sectors of focus include agriculture, affordable housing, energy and education.

EGF is one of the key interventions to promote the growth of exports which has windows for critical undertakings in the sector like market penetration in form of matching grants, subsidized interest rates and credit insurance guarantees.

Under the EGF, an exporter desirous of exporting to a new market can be financed to the tune of US$ 100 000 with BRD guaranteeing up to 70% of facilities which is issued by the commercial banks.

Since establishment of the EGF, the Government, together with BRD and KfW, a development bank owned by the German government, have injected millions in the fund, which export-oriented businesses can access in form of credit and grants.

Figures from BRD show that the Government has invested Rwf3 billion into the facility of which Rwf1.2 billion has been utilized while KfW has injected in Euros 8.5 million (approximately Rwf8.6 billion).

Six billion of the funds were channeled through financial institutions.

Four years later since the establishment of EGF, the number of supported firms has increased as BRD targets expanding awareness of the fund to more stakeholders.

Speaking to the media at the launch of the campaign, Eric Rutabana, the CEO of BRD said that one of the bank’s focuses is to position the EGF within the Rwandan economy to facilitate ease of access to financing at a favorable interest rate.

“The Export Growth Fund aims at addressing key challenges faced by exporters such as limited access to finance, weak supply chains for processors, inadequate export infrastructure and small exporter bases mainly due to inadequate skills. Export Growth is key priority for the Government and as such, various measures have been taken to boost Rwanda’s export trade,” he stressed.

Smooth eligibility criteria

BRD has designed another window which will see EGF open up to people with potential ideas to encourage private sector investments into startup projects that recapture domestic markets and promote export related activities.

Increasing beneficiaries

Removing the requirement of exporting 40 per cent of products as one of criteria to benefit from EGF saw more firms benefiting from the facility. Last year 16 exporters benefited from the fund from ten exporters who had previously received funds from the facility while only five exporters received funding from the facility in 2016.

At the outset, EGF benefited only non-traditional exporters like those in horticulture, artisanal mining, and manufacturing but was later opened to other sectors like coffee and tea.

So far, 31 projects have benefitted from EGF since its establishment. Through the facility, eight projects have benefitted from line of credit extended to five commercial banks by BRD.

Overall, Rwf4.4 billion of investment has been approved to these projects in the past three years, almost Rwf500 million interest subsidy has been given out and Rwf758 million worth of grants have been approved.

Rwanda Farmers Coffee Company, R&B Import-Export Ltd ,Kinazi Cassava Plant(KCP),Karongi Tea Factory, Prime Economic Zones, Soft Packaging Ltd, Inyange Industries Ltd, C&H Garments Ltd ,Fine Traders Ltd, SteelRwa, S&H Industries Ltd, Trust Industries Ltd are among firms that have benefited from BRD support through EGF.

Partners 

BRP partners with other commercial banks including Equity Bank,  I&M Bank, Cogebanque, Bank of Kigali & BPR part of Atlas Mara to offer export credit to exporters.

The fund started with three banks while 3 others joined later.  

BRD CEO says, more 4 banks have expressed interest to partner with the fund and expressed optimism that all financial institutions will join gradually.

The EGF is available to qualifying exporters through the following windows;

The Investment Catalyst Facility: It encourages private sector investment in export-oriented production in order to increase availability of goods and services for export where the cost of financing is capped at 14% as interest rate applicable on loans to exporters.

The Matching Grant Facility: This window encourages firms to enter the export market by reducing the costs of Rwanda Firms when adjusting to standards and other technical entry requirements in foreign markets.  Grants are offered or matched up to the tune of US$ 100,000.

The Credit Insurance Guarantee: It offers specific transaction related guarantees to commercial banks to provide export finance to exporters for transactions up to 80% of value of exports. Currently, we have launched the Horticulture Guarantee Facility to promote exports of agriculture products.

The Industrial Start up Fund: The latter encourages private sector investments to start up projects that recapture domestic markets and promote export related activities.

Despite there being such good initiatives by both the Government of Rwanda and BRD and increased partnership with the Participating Financial Institutions (PFIs), the uptake of export related financial products seems not to have reached the expected  targets, BRD reveals.

According to the bank, this is attributed to the notion that key stakeholders and the target market do not have sufficient information about the available financing facilities offered by PFIs hence pushing for the need to educate exporters on the options available, in addition to the eligibility criteria.

BRD says, awareness and education of products may not be enough and highlighted that beneficiaries need to have the capacity to develop viable and bankable business cases to be able to get financing.

The launched campaign aims at increasing awareness on export financing, channel the traffic to PFIs, and ultimately increase product uptake.

This will be done through increasing PFIs visibility, creation of product awareness, education of exporters on the eligibility criteria and ensuring ease of access to information on the financing product.

Interested Rwanda exporters can access the fund by visiting any of PFIs namely; Equity Bank, I&M Bank, Cogebanque, Bank of Kigali and BPR part of Atlas Mara while other partners will be communicated during the course of the campaign.

Source: Hope Magazine

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