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Loans peak for Rwanda's Small and Medium Enterprise – Money Matters

August 14, 2012 No Comments »

The amount of cash loaned to Small and Medium Enterprise (SME) in Rwanda has reached a peak thanks to a government drive to empower the sector which it sees as a key catalyst for economic growth.

Figures released by the National Bank of Rwanda show that in the first half of this year Rwf147.7 billion was lent to SMEs compared to Rwf124.9 billion in the same period last year.

By June this year, Microfinance Institutions approved Rwf7.7 billion while banks loans totalled Rwf139.9 billion.

A shift in conventional lending norms and the introduction of private Credit Reference Bureau, which provides the credit history of borrowers, has triggered the surge in loans

Central bank Governor, Amb. Claver Gatete, said: "We see this as tremendous achievement, we recorded 17 per cent of the overall lending portfolio higher than in Nigeria and South Africa at five and eight per cent respectively.”

The performance is also slightly above the average of 16 per cent in developing economies.

SMEs have the potential to be the growth engine of the economy in Rwanda due to their ability to create jobs, foster entrepreneurship, and to provide depth to the industrial base of the economy.

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However, SME's share of credit is still relatively small compared to their economic importance and experts say the country must continue to aggressively market lending opportunities to SMEs if growth is to continue.

In terms of distribution commerce, hotels and mortgage industry have the big shares with 41 and 22 per cent respectively, manufacturing accounts for nine per cent, agriculture, fishery and livestock with nine per cent.

Vianney Kabera, proprietor of Fresh Park Company acknowledged that banks and other financial institution are supportive compared to previous years.

"It is impressive that every bank now has an SME department a policy which was not there before 2010 and this helped SMEs access loans more easily," he said.

The figures also revealed a new indicator with regards to access to finance is the desire by women entrepreneurs to get loans which increased to 22 per cent from 16 in 2006.

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