Home NewsNational Bank of Kigali, BDF Sign Rwf30billion SMES Derisking Partnership To Boost Small Businesses

Bank of Kigali, BDF Sign Rwf30billion SMES Derisking Partnership To Boost Small Businesses

by Daniel Sabiiti
1:41 pm

BDF CEO Vincent Munyashyaka with Dr. Diane Karusisi, CEO, Bank of Kigali, pose for a photo after signing the partnership agreement.

The Bank of Kigali (BK) and the Business Development Fund (BDF) have entered into a partnership agreement that will enable Micro, Small and Medium Enterprises (MSMEs) to access finance with a good percentage of risks covered.

The partnership was signed this December 27, 2023 between the Chief Executive Officers (CEOs) of both institutions, Dr. Diane Karusisi (BK) and Vincent Munyeshyaka (BDF) and is expected to de-risk up to Rwf30billion in individual SMEs loans offered by the bank in the medium term.

This means that MSMEs will get loans from the Bank of Kigali and BDF will derisk banks to allow them to lend more to their clients- where the Fund can cover from 50% up to 75% of risk of loan received from the bank.

Karusisi said that three years ago the bank ventured into the SMEs strategy and managed to set up an SMEs Center (at CHIC building) to support the sector clients and entering this partnership will enhance BK’s strategy to financially empower SMES and diversify its portfolio.

The partnership with boost Micro, Small and Medium Businesses.

“This is an important milestone for us, because it is really going to boost our appetite especially for small and medium enterprises because when you look at our portfolio, we have large companies and we want to diversify into the small and medium segment and we believe this guarantee is going to support us to do just that,” Karusisi said.

BDF CEO Munyeshyaka said that their core mandate is to support the SMEs sector development in Rwanda through access to finance and this partnership is a big opportunity to work with BK- a strong partner in the financial market, to attain their five-year strategy.

“For us BDF, today is a great journey to us simply because we are attracting and creating partnership with BK is our ambition and we think, together, we can boost SMEs development that is the backbone of our economy and together we can support our economic development,” Munyeshyaka said.

Dr. Karusisi said through the Partial Credit Guarantee agreement will go a long way in boosting small and medium businesses.

He explained that partnership agreement is a medium-term solution to support individual business but with a future plan to venture into portfolio guarantee financial de-risking.

Munyeshyaka said that they started with BK but the wider plan to work with key banks to pilot the portfolio guarantee (where bulk funding is de-risked to a group of SMEs instead of an individual.

BDF revealed that starting next month January 2024, they will have a World Bank technical advisor to support them in building the portfolio guarantee service to avoid going into risk assessment- which is a core function of a commercial bank.

“This means that in future, instead of dealing with the individual risks, BDF will be dealing with collective loan fundings and functioning as underwriters (like insurance companies) in assessing the loans,” Munyeshyaka said.

BDF says that it has set a target of de-risking MSMEs with at least Rwf10billion per year as a way of increasing access to MSME loans.

BDF CEO Munyashyaka hailed the groundbreaking partnership between the two financial institutions.

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