Rwanda cuts interest rates for SMEs
Lower interest rates will enhance productivity of SMEs and spur growthFollowing a credit agreement between Germany's Development Bank (KfW) and the Development Bank of Rwanda (BRD) on 21st of November, Rwanda has inaugurated a fund scheme which allows Small Medium Enterprises (SMEs) to borrow at lower interest rates. In line with the provision of the agreement, Germany's KfW will direct 8.5 million euros to Rwanda's BDR while BDR will authorize loans for SMEs. The loan is designed for SMEs that export up to 40 per cent of their production at interest rates lower than the current 14% and beyond in commercial banks. Speaking on this development, Rwanda's Minister of Finance and Economic Planning Claver Gatete said, "I couldn't wait to see the signing of the funds and I came here to personally witness and make sure it's real. This fund is very important to realizing our export targets." Rwanda's export target is at 15 per cent per annum as a vital part of her economy. Markus Bär, Director of KfW office in Kigali added that the effort is essentially designed to enhance the effectiveness of SMEs and not a competition with commercial banks loan schemes. Commercial banks interest rates in Rwanda range from 14 per cent and above. Despite complaints from customers about high interest rates, commercial banks have maintained high interest rates stating that poor savings culture and cost of securing finance from global financial institutions are factors responsible for high interest rates. SMEs cover up to 98 per cent of Rwandan businesses and access to finance has been a major challenge; the new agreement between KfW and BDR will enhance productivity of SMEs in Rwanda.