By Dias Nyesiga
Local exporters are expected to access more credit after the government and Development Bank of Rwanda (BRD) agreed to increase financing to the sector.
The financing under the export growth facility that had initially Rwf 1 billion financing commitment this year from the ministry of Trade and Development bank will now have Rwf 2 billion available for exporters to borrow.
The memorandum of understanding between the ministry of trade and the bank that is expected to be signed this week, according to ministry officials will see both parties increasing their earlier commitment by Rwf 500 million.
The facility, developed by Ministry of Trade is one of the fourth pillars of government’s export development strategy to offset the country’s trade deficit standing at 5.1 percent in the first half of 2016 through promotion of exports.
The understanding harnesses the earlier agreement that Development Bank of Rwanda refinances four partner banks, Urwego Opportunity Bank, ECOBANK, I&M Bank, and BPR Atlas Mara.
“The facility will increase access to finance by Rwandan firms and reduce their interest expenses so we will not have problems of exporters failing to export because they don’t have funds,” said Emmanuel Hategeka, permanent Secretary, Ministry of trade he minister said.
With the facility, exporters will also be able to access the credit at 10 percent interest. Previously, exporters have been decrying of higher interest rates on loans acquired while accessing financing which ranged between 17 percent and 19 percent.
The facility is also looked to support exporters to satisfy the recently negotiated markets where Rwanda is expected to send sizable products in order to grow its export base.
“Rwanda’s exports have been growing steadily over the past ten years, with an annual average growth rate of 21percent,”Said Emmanuel Hategeka, permanent Secretary in the Ministry of trade and Industry.
The facility is aimed at fast-tracking export growth through solving the challenge of access to finance and high interests that have as well as augment exporters’ ability to compete successfully on the international market and ultimately enhance the country’s export earnings.
“Before this facility, financial institutions were extending financing to traditional exports such as coffee, tea, tourism, minerals and hotels and tourism,” Said Benjamin Manzi, Head of Export Financing Department at Development Bank of Rwanda.
Accordingly, the facility will operate under the investment catalyst fund; encouraging private sector investments in export, the matching Grant Fund which helps exporters in penetration of external markets of up to 50 percent of the total project cost and Export Guarantee Fund to enhance credit worthiness of exporters.
The government through made in Rwanda campaign is encouraging the production of local products which are currently imported while also encouraging Rwandans to consume local products.
Statistics form ministry of Trade show that largest export to the US market was coffee with over 23 million in exports, minerals $ 17.8 million, pyrethrum 2.1 million and a range of smaller value exports.
Moreover, Rwanda and Kenya signed the East Africa community-European Union Economic Partnership Agreement- “EAC-EU EPA” more Rwandan exports access to the larger European Union market.