IFU Boosts Rwandan SME Lending with Danish Guarantee
Deal News | Dec 03, 2024 | Investment Fund for Developing
The Investment Fund for Developing Countries (IFU) has announced its first deal in Africa through the issuance of a guarantee to BPR Bank Rwanda, aiming to bridge the significant financing gap faced by the country’s Small and Medium Enterprises (SMEs). SMEs in Rwanda are critical for economic growth and employment creation, but face challenges in obtaining financing due to high collateral demands of up to 120%. Through this partnership, the IFU will cover 70% of BPR Bank's SME lending risk, backed by a Danish government guarantee, thus unlocking an additional USD 8 million for Rwandan SMEs. The deal is also supported by technical assistance from Access to Finance Rwanda, funded by the Danish Ministry of Foreign Affairs, to aid in business plan development and the creation of new financial products. The initiative focuses particularly on sectors such as green investments and women and youth-led businesses, marking a significant collaboration between public and private sectors to foster sustainable economic development in Rwanda.
Sectors
- Financial Services
- SME Development
- Renewable Energy
Geography
- Rwanda – The primary geographic focus of the article is Rwanda, where the SME lending initiative is being implemented.
- Denmark – The guarantee is backed by the Danish government, and several Danish officials are highlighted in the article.
Industry
- Financial Services – This article involves a financial guarantee transaction between a bank and an investment fund aimed at supporting SME financing.
- SME Development – The focus of the article is on providing financial support to small and medium-sized enterprises in Rwanda, a sector crucial for the country's economic growth.
- Renewable Energy – Part of the guaranteed lending will target green and renewable energy sectors.
Financials
- USD 5.6 million – Amount of the guarantee provided by IFU to BPR Bank Rwanda.
- USD 8 million – Expected additional capital to be unlocked for the SME sector in Rwanda.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| IFU (Investment Fund for Developing Countries) | Guarantee provider | Company | A Danish investment fund offering a guarantee to support SME lending in Rwanda. |
| BPR Bank Rwanda | Recipient of guarantee | Company | The second largest bank in Rwanda, focusing on increasing its lending to SMEs. |
| Danish Ministry of Foreign Affairs | Supporter of initiative | Government | Providing financial backing and technical assistance grant for the initiative. |
| Access to Finance Rwanda | Technical assistance provider | Company | Supporting SMEs in business plan development and the bank in developing new financial products. |
| Magnus Cedergren | Head of Guarantee Facility | Person | IFU representative commenting on the initiative. |
| Patience Mutesi | Managing Director of BPR Bank | Person | Representing BPR Bank at the launch event. |
| Jean Bosco Iyacu | CEO of AFR | Person | Prominent attendee at the launch event. |
| Ole Thonke | Deputy Secretary of State for Development Policy | Person | Danish government official involved in the initiative. |
| Signe Winding Albjerg | Danish Ambassador to Uganda | Person | Attended the launch event representing Danish interests. |