The German government has provided a total grant funding of €10.7M to two local banks, which both banks will deploy to selected SMEs in their portfolios suffering from the negative effects of Covid-19.
Each bank will supplement these grants by providing additional credit relief to their pre-selected SME clients from their own sources. This combination of measures aims to enable the beneficiary SMEs to maintain the largest share of their employees and to support them in their economic recovery.
The funds will be disbursed through KFW, German’s state-owned development bank to Bank of Kigali Plc. and I&M Bank (Rwanda) Plc. to benefit over 400 SMEs across a wide spectrum of important economic sectors (such as hospitality, construction, education, logistics or health) through the project. The interventions of both banks combined contribute to the preservation of almost 10,000 jobs in SME’s directly, and a countless number in other small enterprises indirectly.
The Ambassador of the Federal Republic of Germany to Rwanda, Dr. Thomas Kurz said that in light of the massive socio-economic impact of the Covid-19 Pandemic in Rwanda, substantive action is necessary to help preserve employment, production capacities and supply chain linkages and support the recovery. He said that with the help of BK and I&M, the project will support SMEs – the job engine of the Rwandan economy – across all industries to fund jobs, working capital, and support credit service.
BK’s CEO, Dr. Diane Karusisi, said in a statement that, “We believe that when our SME sector is assisted to weather this crisis, it will continue to be uniquely positioned in the transformation of our economy, providing off-farm jobs and supporting the livelihoods of many.” She believes that “This facility, aimed at preserving jobs in the SME sector is a very good complement to Government’s and BK’s efforts to stimulate the economic recovery.”
Robin Bairstow, I&M Bank CEO, said “The grant clearly compliments the efforts of the Rwandan Government and the Bank to provide assistance to the sector, especially maintaining employment.” He added that his bank has built a strong SME portfolio through Financial Skills’ Workshops offered to clients to mitigate their businesses’ financial risks during the pandemic. “We expect our customers to stay afloat and continue progressing steadily even after the COVID-19 Pandemic. In the past, we have seen businesses grow from SME to Corporate profiles and this new grant will make it possible for our clients to maintain that growth.”
The Director of KfW‘s Office in Rwanda, Ms. Charlotte Povel, said that this shows that Rwandan banks assume responsibility for the economic recovery of Rwanda and for sustaining and fostering jobs in the SME sector. “It also shows, how international development and the domestic financial sector can work hand in hand to fight Covid-19 and its related effects,” she said.
From the grant, BK received €5.2M (about Frw5.8B) and €5.5M went to I&M Bank.
How the two banks received the grant
Within the framework of the Compact with Africa and the special initiative on training and employment, the German Federal Ministry of Cooperation has supported the establishment of an “Investing for Employment” GmbH through KfW. The GmbH is based in Germany and operates similarly to a regional fund: calls for proposals are planned in Morocco, Tunisia, Egypt, Senegal, Côte d’Ivoire, Ghana, and Rwanda. A first-round in Ethiopia has already taken place. Applications were open to the public and private institutions/companies that use the grants received to make investments that primarily create jobs. The whole process is supported by a consultant and accompanied by KfW.
Original article on Taarifa Rwanda