Bank of Kigali (BK Group Plc) has signed with a French development Agency (AFD) a credit line worth $20M (equivalent Rwf18billion) to finance small and medium enterprises in agro business, ICT and renewable energy.
The deal was penned down om Thursday in Kigali city between the BK CEO Dr. Diane Karusisi and AFD Group CEO, Rémy Rioux.
AFD is part of the French delegation that is in Rwanda to build a business relationship between the two countries, of which Rémy said that this was overdue since the group top official was last in Rwanda in 1992.
“I wanted to personally come here (Kigali), and not send our Africa regional representative, to witness this signing which we started talking about eight years ago,” Rémy said.
AFD re-entry into Rwanda comes as part of the €2.5billion pledge in March by President Emmanuel Macron to boost French-Africa business relation until the year 2022 under a programme dubbed ‘Choose Africa’
In this regard, Rémy explained that the group is now focusing on non-sovereign entities in Africa before going for sovereign ones and the choice of coming to Rwanda was informed by the countries progressive economy.
“There is no better place to do this than Kigali. We will deploy more financing capacity and that is a lot of work ahead of us,” Rémy said.
The AFD credit lines will also be implemented with a Grant Agreement of Rwf306 million comprising of expertise capacity support in SME credit assessment and in environmental and social aspects, among others.
This credit comes barely three months after BK Group Plc entered a similar deal worth Rwf30billion with European Investment Bank (EIB) to finance several business investments in Rwanda.
Asked whether this is not too much borrowing Dr Diane Karusisi said that there is a big demand and appetite for credit among Rwandan SMES of which the bank cannot meet thus a need to find more funders.
“Clients’ demand for loans is too high and yet we are not having enough local savings to meet the demand. We will keep borrowing more to meet this demand but make sure that our interest rates are affordable,” Karusisi said.
BK borrowed this credit line at about 6% in US dollars (est 3.5% in Rwanda francs) and projections according to Karusisi indicated that about 50 SMES will benefit from the credit, each getting Rwf500m at a percentage between 15%- and 17%.
“Every business is welcome provided they can meet the requirements. The interest rates will vary depending on our risk assessment of their business,” Karusisi said; adding that this flexibility is because we also got a flexible credit repayable in eight years”.
Conditions set in this credit are that one must have a good business plan and employing less than one hundred employees, from any sector, but especially in Agribusiness, ICT and renewable energy as priority focus.
The French Development Agency, whose acronym is Agence française de développement (AFD) funds, supports and accelerates the transitions the French people’s to support the sustainable development goals.
Its focuses on climate, biodiversity, peace, education, urban development, health and governance.
“Our teams carry out more than 4,000 projects in France’s overseas departments and territories and other 115 countries,” says AFD officials.