Development Bank of Rwanda - Small and medium enterprises in agriculture, agro-processing, information communication technology, education and tourism that need working capital may try the Development Bank of Rwanda (BRD).
BRD last week had its treasury beefed up with a $8million (about Frw5.2 billion) loan from the African Development Bank (AfDB) to be lent to the private sector.
The loan, accompanied by a $730,800 technical assistance package from the Fund for African Private Sector Assistance (FAPA) funded by the Japanese and Austrian government together with AfDB and the Austrian Development Bank, adds to BRD's growing financial muscle to finance private sector operations in the country.
According to the chief executive officer, Jack Kayonga, the bank's lending to the private sector grew to over Frw 50 billion last year--evidence of BRD's growing intervention in key sectors of the economy such and primary agriculture, agro-processing, housing and construction.
AfDB's line of credit comes at the time when the bank is finalizing plans to fund this year's coffee season that starts this month. BRD is a leading financier in the coffee sub-sector and agriculture in general. Last year, credit to the coffee sub-sector hit Frw 8 billion. The bank funds the entire coffee value chain--from growing, processing to export.
This is the fourth line of credit AfDB is extending to BRD, the Government of Rwanda's private sector-lending arm, under a partnership that started about 16 years ago.
Just like the previous loans, the bank will put the money to proper use to ensure the development of the country through small and medium enterprises that are considered the engine of economic growth and job creation, Kayonga said.
Rwanda's economy is generally SME-based with most of the country's labor force employed in small enterprises, some of them family-owned. It is therefore understood that availability of credit to private sector businesses in sectors such agriculture, agro-processing, information communication technology, education and tourism will boost production and create more jobs.
'The AfDB line of credit and the FAPA technical assistance are aligned with the AfDB's private sector operational priorities for long-term financing to support private sector development especially where long-term financing is scarce. This program will enable BRD to respond effectively to challenges of developing and promoting the private sector SME development in Rwanda,' said Negatu Makonnen, the AfDB resident representative.
According to Kayonga, the $730,800 FAPA technical assistance will be invested in developing internal capacity of the bank in areas such human resource, information technology and studies to understand the changing market situation the bank operates in.
'The grant aims to improve BRD's staff skills, information technology systems, appraisal systems, treasury and financial management, credit risk management and internal controls,' a joint statement issued by BRD and the AfDB said.
Makonnen described BRD as 'a very well managed institution' that has honored its previous loan obligations without default. He pledged the AfDB's commitment to work with local institutions for the development of the country.
Over the past six years, BRD assets have grown by about 30% per annum with loan portfolio performing at over 96%. This means that the ratio of non-performing loans remains lower than the regulatory benchmark of 7%.
BRD's good performance has also been internationally recognized when it was last year named the third best managed development bank in Africa by its peers under the Association of African Development Finance Institutions (AADFI).
The AADFI also awarded BRD A+ rating having scored 88.2% points as third best development bank in Africa. An A+ rating is the second best rating any financial institution can attain and those that attain that rating demonstrate a very high degree of international best practices.
Out of the 73 development institutions assessed, including 61 national institutions and 12 regional banks, the African Export and Import Bank (Egypt) emerged top with 92.6% points followed by IBILE Holdings Ltd of Nigeria with 88.8% while BRD came third with 88.2%.
Last year, Kayonga was voted Africa's Young Business Leader of the year
for his role in turning round BRD's fortunes by making it not only profitable but also one of the best managed development finance institution in Africa.
BRD's growth has also been reflected in the broader range of products available to clients with the introduction of retail banking services. This has seen the introduction of over-the-counter operations, cash management and other direct services to customers.
By Edward Ojulu