Home Business & TechEconomy Enabel Releases € 2.3M Grant to Boost Agriculture, Construction Value Chains

Enabel Releases € 2.3M Grant to Boost Agriculture, Construction Value Chains

by Jean de la Croix Tabaro
11:37 pm

Director General NIRDA Dr. Christian Sekomo Birame(L) exchanging grant agreement documents with Enabel country representative Dirk Deprez

The Kingdom of Belgium through Enabel has signed a grant agreement with the National Industrial Research and Development Agency (NIRDA) and the Development Bank of Rwanda (BRD) to boost investment of SMEs in Agriculture and Urbanization sectors.

Companies to benefit from the support include piggery, poultry and animal feeds in agriculture sector as well as those in stone and clay value chain in urbanization sector.

The 2,3 million Euro (1,8 million for Agriculture and 500,000 for Urbanization) dubbed “Access to Finance” grants to NIRDA and BRD will be used as an interest rate subsidy that eligible beneficiaries operating in the supported value chains would contract by taking a loan from BRD.

BRD will work with other commercial banks, MFIs or SACCOs where eligible firms will receive a reduction of 8% in interest rate.

This complements grants signed with BRD in December 2021 for Four hundred thousand Euros (400.000 euros) focusing on Technical Assistance and Capacity Building.

Enabel will provide technical Assistance to improve the financial management and business skills of value chain actors while participating Banks, MFIs and SACCO’s will be provided with capacity building to improve their business knowledge on the supported value chains and to help them better assess credit applications from these respective sectors.

A critical component of private sector support in the construction and agriculture intervention is access to finance as limited access to finance is an important barrier to growth.

The current cost of finance at average of 21% interest rate in different financial institutions, strict collateral and administrative requirements are challenging for many firms. Besides, the process of acquiring loans is lengthy and is costly (both in terms of the cost of financing and the administrative cost for the process).

The funds granted by Enabel will serve to de-risk investments in the aforementioned value chains and in reducing the barriers for investment to the value chain actors.

“We believe that this is a huge contribution in that it will offload companies and enable them to acquire loans that they will be able to service-hence use the loan to improve their productivity and competitiveness,” said Dr. Christian SEKOMO BIRAME, NIRDA Director general

“This is so critical because in most cases, companies shy away from seeking loans in financial institutions due to high interest loans they charged among other factors,” he added.

NIRDA, also with support from Enabel is in the final stage to support selected firms in the said value chains to acquire upgraded equipment, technical support and business advisory services through its Open Calls Program.

With the two packages namely the support from the Open calls program and the subsidized interest rates, parties hope that companies in agriculture and urbanization sectors will be able to get support and run their business smoothly.

NIRDA boss(L) and BRD CEO Pitchette Kampeta Sayinzoga

NIRDA will also facilitate the application process through awareness and mobilization, where eligible companies operating in the pig, poultry, animal feeds value chains in agriculture and stone and clay value chains in urbanization will be selected.

All beneficiary companies applying for loans will first be required to comply with the loan criteria of their respective bank, MFIs or SACCOs.

According to the CEO of BRD Kampeta Pitchette Sayinzoga, all partners in this effort are benefiting.

As far as her institution is concerned, she said that their subsidy of 8% for every SME project that will qualify in this category is a great deal.

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