SMEs in Uganda and Rwanda to benefit from €11m loan program
DFCU bank and KCB Rwanda have received €5m and €6m respectively from the European Investment Bank (EIB) to extend cheaper loans to small and medium-sized enterprises (SMEs) in Uganda and Rwanda.DFCU bank and KCB
Rwanda have received €5m and €6m respectively from the European Investment Bank (EIB) to extend cheaper loans to small and medium-sized
enterprises (SMEs) in Uganda and Rwanda.
Pim Van Bellekom, EIB vice president, said last week that the money would help SMEs receive long-term funding, which is still a challenge in the two countries, The Observer reports.
"We have engaged these banks to act as reliable financial intermediaries to reach out to these small and medium businesses," he said. Businesses will receive medium and long-term loans of up to six years, from as low as Sh15m up to Sh300m.
SMEs in Uganda and Rwanda are often hindered by a lack of access to long-term development loans, as they often cannot provide the guarantees requested by banks. High interest rates also hamper the development of finance, with rates currently averaging at 22 percent - a situation that contrasts with the important part played by small companies in the two
SMEs in Uganda indeed constitute up to 90 per cent of the private sector and contribute over 70 per cent to total Gross Domestic Product, while SMEs comprise approximately 98 per cent of the total businesses in Rwanda and account for 41 per cent of all private sector employment.