SME Garanti Rwanda - Bank of Kigali

The agreement was signed early 2024 therefore, it is too early to report any results.

As described in the introduction, the guarantee will be part of a SME Finance Facility. The overall goal of the Facility is to support and stimulate the financial sector to better serve SMEs in productive sectors - leading to business growth, improved profitability, and job creation, with an emphasis on job creation for women and youth. The guarantee is foreseen as one of three components under the Facility and their primary purpose is to act as risk mitigation for increased lending to SMEs. The specific objectives of the guarantees and the SME Facility is to: 1) enable access to credit for SMEs that would otherwise be rejected due to insufficient collateral by providing a risk-sharing instrument for the banks 2) expand the participating banks SME lending portfolios, in terms of both volumes and number of SMEs, thus increasing the Banks familiarity with the targeted SME segments and building credit registry for benefitting SMEs, including women and youth-owned enterprises 3) together with the TA and knowledge management component under the SME Finance Facility managed by AFR, encourage banks to develop financial products and credit processes targeting SMEs that are less reliant on collateral and that can be piloted using the guarantee as a de-risking instrument. 4) Enhancing SME Finance through Innovation and Capacity Building among participating banks and financial sector regulators through the provision of TA and upskilling focused on promoting new SME-centric financial products and an enabling environment. This targets the banks benefitting from the guarantee, but also other financial sector players as well as regulators, and can include, for example, support improving credit appraisal processes for SME finance, piloting new SME lending products, identify areas for efficiency gains that could reduce costs and turnaround time, as well as understanding institutional norms and attitudes that influence perceptions of the SME sector, particularly women and youth led SMEs. 5) SME Investment Readiness Support to target the low levels of financial and digital literacy and limited entrepreneurial and business management skills among SMEs which hinders their potential for growth, not least by increasing the risk perception of SMEs among potential investors and lenders. The focus will be on supporting development of a market for more tailored, high-quality business support services for SMEs which should aims to make these more investment ready. Taken together the higher impact objectives of the guarantees, and their complementary components, is to sustainably scale-up finance to small and medium enterprises and women and youth-owned enterprises. By targeting economic sectors with high-growth and job creation potential, as well as sectors important for a transition towards green growth, it is expected that the Facility and the guarantees will contribute to private sector development, increased creation of productive jobs and contribute to a more environmentally sustainable and inclusive economic development.