Rwandan exporters have a new fund from which they can borrow at low interest rates to facilitate them in exporting various goods abroad.
About Rwf 2 billion has been provided under the Export Growth Facility initiated by government and Development Bank of Rwanda.
“The facility will increase access to finance by Rwandan firms and reduce their interest expenses. We won’t have problems of exporters failing to export because they don’t have funds,” said Emmanuel Hategeka, permanent Secretary, Ministry of trade.
Exporters are also expected to access loans at 10% interest from the facility. Previously, exporters were charged interests of up to 17% and 19 % on loans saying this was too high.
The country agreed to increase financing to the sector looked at to offset the country’s trade deficit.
The facility will support exporters to satisfy the recently negotiated markets where Rwanda is expected to send sizeable products in order to grow its export base; one of these is the US Rwanda trade relations.
“Rwanda’s exports have been growing steadily over the past ten years, with an annual average growth rate of 21percent,”Said Hategeka.
The memorandum of understanding between the ministry of trade and the bank expected to be signed this week, 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 at 5.1% 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 is aimed at fast-tracking export growth through solving the challenge of access to finance and high interests that have also boosted 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 support traditional exports; 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% of the total project cost and Export Guarantee Fund to enhance credit worthiness of exporters.
The government through made in Rwanda campaign is encouraging production of local products which are currently imported while also encouraging Rwandans to consume local products.
Statistics from Trade ministry show the largest export to US market in 2015 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.