{Small and Medium Enterprises (SMEs) have a good reason to upscale their businesses after I&M bank secured a financing facility worth Frw 7.6 billion from the European Investment bank (EIB). This comes at a time when the government is supporting —“Hanga Umulimo” programme which will see 10 SMEs selected from each of the 30 districts based on their business plans that will be facilitated to access funding and other business support services.}
The loan will focus on small businesses in the country’s key sectors that have been underserved by commercial banks’ current loan products and will alleviate fears that the country’s economic engine lacks access to financing.
“Lending under the initiative will focus on sectors currently underserved by commercial banks, including agriculture, fishing, manufacturing, construction, transport, tourism, education and healthcare,” said Sanjeev Anand, managing director of I&M Bank. “We believe that the long-term financing lines provided by EIB will go a long way in facilitating our efforts to provide investment support to SMEs.”
Unlike the current loan products to SMEs, this facility will also cater to medium term loans of between four to seven years; previously unavailable in the country, this will help small businesses.
“The medium to long-term funding, along with other products and services, make our SME offering one of the most competitive in the market,” Anand said, adding that the SME and corporate sector form the most important part of I&M Bank’s strategy in Rwanda, which is in line with Rwanda’s national priorities for economic development. Moreover, the scheme will reinforce crucial long-term investment by Rwandan companies, most of which are small businesses, to support growth and job creation.
Accordingly, under the new facility, it is expected that close to 1,300 jobs will be created by around 120 small and medium sized companies benefiting from the new engagement.
We are committed to supporting the local financial sector and stimulating private sector development across Africa, and this new scheme is part of our broader engagement to support large-scale investment in water and energy in Rwanda.” said Pim van Ballekom, European Investment Bank vice-president responsible for sub-Saharan Africa.
Experts are convinced that growth of the private sector is essential for economic development and reducing poverty in Rwanda. The European Investment Bank, which is the European Union’s long term lending arm, is working with leading banks across East Africa to support private sector investment and in Rwanda it has been engaging in financing energy, infrastructure, and clean water among others. “This is a timely engagement of the EU lending arm in a sector which is most important for the new development strategy of the Rwandan government,” explained the head of the EU Delegation to Rwanda, Michael Ryan.
The facility comes after the EUR 3 million credit line, also provided by EIB and I&M, that was agreed at the end of 2006. That credit line saw a successful allocation of loans benefiting projects in transport (37%), services (24%), manufacturing (22%), education (8%), construction (7%) and health sectors (2%).
Smaller businesses are one of the developing world’s most powerful economic forces, comprising the lion’s share of employment and GDP. But they should not be seen in isolation. Under the right conditions, they can be key parts of thriving, globally competitive industries, creating the large numbers of jobs needed to reduce poverty. In the right business environment, SMEs can grow into large firms, changing the game locally, carving their niche globally.
But even if remaining small or mid-size, they can create significant income opportunities for their workers and generate new tax revenues for government services. They do so by boosting their productivity and sales and supplying increasingly valuable goods and services. The best ones cannot stay competitive if they stand alone. They are part of dynamic and growing value chains whose job opportunities raise incomes, increase living standards, and improve lives.
Leave a Reply