International Finance Cooperation (IFC), a member of Word Bank Group, has offered a US$2.5 million loan to Rwanda’s Urwego Opportunity Bank (UOB), which is also the first regulated microfinance bank.
The investment, according to Jean Philippe Prosper, IFC director for East and Southern Africa aims at complimenting the government and German Development Cooperation (DFID) Access to finance Rwanda program which aspires to increase access to formal financial services from 21 percent to 30 percent by 2014.
“Supporting the growth of microfinance options for small and medium enterprises in rural areas is a strategic priority for IFC in Africa,” Prosper further said, “While Rwanda is making big strides in business reforms, more work needs to be done to increase opportunities for Rwandan people. The partnership with UOB is an important step toward towards creating jobs and income for entrepreneurs in rural areas where economic growth is most needed” he said.
Prosper, during a joint press brief with the bank’s management said that IFC’s local currency loan, arranged though unique swap agreement with the National Bank of Rwanda will help UOB manage risks more effectively by limiting foreign currency exposure.
He added that the swap facilitates access to long-term local currency funding in the financial system.
“IFC’s investment will allow us to provide longer term financing to support portfolio growth, and fund longer tenor products,” said Jeffery Lee, president of Urwego Opportunity Bank.
Lee stressed that UOB will use the finances to support its existing lending facilities, while expanding into rural areas.
He also pointed out that, “UOB aims to increase financing options for micro, small and medium enterprises in rural areas. We believe that a regulated approach to microfinance is most effective to maximize outreach and support entrepreneurial activities amongst poor.”
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