Rwanda has launched the second phase of the Economic Recovery Fund (ERF)worth $ 250 million that will further support economic recovery through increased access to finance for businesses affected by the COVID-19 pandemic.
The second Phase of ERF will provide funding to Made in Rwanda priority sectors in manufacturing including construction materials, agro-processing, textiles, and light materials manufacturing.
The fund will also provide loans to businesses that were hit by the negative impact of COVID-19 on their operations proven by at least a 20% reduction in the recent 12 months.
The launch was presided over by Prime Minister, Dr. Édouard Ngirente in Kigali city on 18 May 2022.
According to Ngirente, the first phase of the Economic Recovery Fund helped in the recovery of the economy and so, the second phase is a continuation.
This fund becomes the second to an initial $100 million fund established in June 2020, bringing the total mobilized fund to $350 million to increase access to finance and also support the recovery and resilience of businesses.
The government is adjusting its public spending to accelerate economic recovery from the Covid-19 effects—characterized by job losses, disruption in international travels, and global supply chains.
“Though it is evident that inflation is persistent, the government is following it up and taking different measures for Rwandans not to face severe impacts. At the moment, Inflation is something we cannot stop as the government; however, we are trying everything possible to reduce the burden for consumers,” Dr. Ngirente said.
“The first phase of the fund highly contributed to the recovery of our economy after it had been affected by the Covid-19 pandemic. I want to emphasize that the government is doing everything possible for the economy of the country and Rwandans to not be very much affected,” the Premier added.
Dr. Ngirente also said that the current inflationary pressures are mainly attributed to the economic shock caused by the Covid-19 pandemic and the Russia-Ukraine crisis.
For example, the Ministry of Finance and Economic Planning (MINECOFIN) says Rwf73 billion in the first phase was used in loan refinancing 151 Hotels and MICE, 69 learning institutions, and 55 Public transport operators.
For the microbusiness support, the government spent Rwf6.7Billion for the economic recovery of 6,715 small businesses, the money channeled through 334 saving and credit cooperatives(SACCOs).
“The first phase strongly targeted building sustainable health sector, fighting the pandemic, supporting vulnerable people, supporting the agriculture sector to get enough food as trading was difficult in the world and supporting coordination of all sectors to fight the pandemic. It also aimed at supporting the private sector that was severely hit by the pandemic,” Dr. Uzziel Ndagijimana, Minister of MINECOFIN said.
According to Dr. Ndagijimana, the second phase of economic recovery involves new and continuous support projects that will be funded to quickly boost the economic recovery and the government plans to spend funds worth $150million.
For example, getting further support will include; investment and working capital for microbusinesses where the government will spend $8million, working capital through Business Development Fund (BDF) $10million, guarantee scheme $30million, capacity building in financial systems $12million, and financing window $37.5million