A great number of Rwanda’s 72, 000 SMEs are about to literally smile to the bank with the Bank of Kigali Group’s $20m funding agreement with French Development Agency (AFD). That is if these SMEs are working in agro-business, ICT, and renewable energy, as the loans are targeted at supporting SDG-specific businesses.
Inking the deal in Kigali city, AFD Group CEO Remy Rioux said he had chosen to appear personally at the signing, rather than send a rep. Reaffirming Rwanda’s position as a leading economy on the continent, Remy said: “there is no better place to do this than Kigali.” This deal is the latest outbound spending in a three-year special investment plan pledged by French president Emmanuel Macron called “Choose Africa,” a project that will reportedly have ploughed €2.5 billion into businesses and governments across the continent by 2022.
Bank of Kigali has been hitting the mark with these large investment deals. During the Africa CEO forum in March this year, the bank secured a €29 million agreement with European Investment Bank to finance businesses in Rwanda. At the time, BK Group CEO, Dr. Diane Karusisi said, “We have found the right partner in European Investment Bank to ensure that financing is not a bottleneck to creating a vibrant private sector in Rwanda.”
Now, with this hefty additional loan window, Karusisi thinks her bank will satisfy the big appetite of Rwandan businesses for credit. She said, “Clients’ demand for loans is too high and yet we are not having enough local savings to meet the demand. We will keep borrowing more to meet this demand but make sure our interest rates are affordable.”
Any fledgeling small business owner knows that loan availability is hardly the problem. Affordability of interest rates has always been the issue. BK understands this, too. Which is why the bank is trying to bridge that significant gap for Rwandan businesses by providing up to €483, 000 to each of the fifty beneficiary SMEs at rates between fifteen and seventeen percent.
Karusisi, however, said the interest rates will vary, depending on her bank’s risk assessment of the beneficiary SME, and especially if the business employs less than 100 people. But she insisted “every business is welcome.” BK Group had borrowed at under four percent interest from the French Development Agency, with the loan expected to be repaid in eight years.
SMEs already provide forty percent of private sector jobs in Rwanda. This new loan facility will add heft to businesses, guaranteeing a respectable decline in unemployment. According to the United Nations Conference on Trade and Development (UNCTAD), ninety percent of global businesses are SMEs. With the right supporting environment and structure, UNCTAD believes nations can make the leap from developing to developed countries. That is what Rwanda is doing. Other nations will do well to apply themselves.
Meanwhile, BK group has unveiled a new soft loans vehicle for farmers called “Ikofi.” First launched in May this year, “Ikofi” was introduced to farmers at the Agric. expo in Kigali, with the bank saying it had registered over 100,000 farmers ahead of the September planting season. “Ikofi” lets farmers build “a saving profile that enables them to access timely agriculture micro loans to purchase agricultural requirements such as fertilizers, seeds and other needs.”
BK Group became a billion dollar company this year, about eight months after it listed on the Nairobi Securities Exchange. It was Rwanda’s largest bank, by assets, and is now becoming an investment giant.
By Caleb Ajinomoh