17 November 2011
The African Development Bank and Bank of Kigali have signed a US$ 12 million line of credit with a US$ 500,000 grant agreement for technical assistance in support of SMEs.
The credit line agreement provides a 10-year US$ 12 million of credit to the bank with a two-year grace period.
“Rwanda has witnessed tremendous economic growth with an average real GDP growth of around 8% over the last 5 years,” said the AfDB resident representative, Negatu. “Considering the growth of investment in SMEs, and the fact that they are critical in job creation and catalytists for growth, we find it very important for this support to be directed to the efforts of SMEs to develop further.”
Claver Gatete, the governor of the National Bank, believes that banks need more investment to support national economic growth. “Such kind of financial support which comes in foreign currencies even help to stabilize our own currency; we call more support to facilitate our financial strategic plans because we can donors a well-designed framework, confidence and experience in managing our financial trends,” the governor explained.
In addition, BK’s managing director James Gatera said that given the bank’s strategic plan it is well shielded against inflation or other external influences. “I am pleased that the bank is once again able to secure wholesale funding at competitive rates. The credit line will enhance our ability in increasing financial services in Rwanda,” he said. “In addition, capacity building remains a critical issue in the industry and the grant will advance the capabilities of our staff and systems, thus improving service delivery.”
He added that with AfDB’s combination of financial credit and technical assistance, BK is expected to grow its corporate, SME and Micro-SME client base from 4,802 to 26,000 by 2017; and an increment of the micro- and SMEs share to 77%. In addition, the number of loan customers is expected to rise from 3,018 today to at least 5000 by 2017, which should constitute at least 70% of MSMEs growth.
And according to AfDB’s Makonnen, the credit line is expected to see more than 2000 jobs being generated in the sub-projects and to see a 60% approximate of additional jobs created with the skilled workers. Moreover, the income of the beneficiary companies should rise by at least 10%.