MSME owners at the facility launch event in Kigali this November 28
Micro, Small & Medium Enterprises (MSME) owners in Rwanda have called on financial institutions (banks) to ease the procedures and process of acquiring loans to further allow entrepreneurs contribute to the country’s economic development goals.
This call was raised during the launch of the MSME Financing Gateway- in Kigali city this November 28, 2024 following facts that despite the contribution of MSMEs to the economy, they still face hurdles in playing their role towards Rwanda’s vision 2030 – creating more jobs and a mid-income economy.
The gateway is a partnership between Private Sector Federation Rwanda (PSF) with International Trade Center (ITC) through the second phase of the European Union (EU) funded, EU-East African Community (EAC) Market Access Upgrade Programme (MARKUP II).
MSMEs contribute to more than 50% of Rwanda’s Gross domestic product (GDP) and account for over 70% of employment, however, these businesses often face significant hurdles in accessing the finance they need to grow and innovate.
The Gateway is expected to link banks and MSMEs with the aim of facilitating their access to finance, addresses the issue of information asymmetry by providing a centralized platform that connects MSMEs with relevant financial institutions and service providers.
It will also enable financial players to increase their market reach (through sustainable intra-African and EU-Africa trade) and propose suitable solutions for MSMEs growth.
Officials at the MSME Financing Gateway launch event
MSMEs who participated at the launch said that the Financing Gateway in Rwanda is a significant milestone to MSMEs contribution to the economic development of their communities, however call for more collaborative efforts especially with financiers like banks.
MSME owners also said the gateway comes at a time when some are still struggling to get loans, mainly due to the lack of collateral and other obstacles in financial services.
Jean Claude Shirimpumu
For example, Jean Claude Shirimpumu, the president of Rwanda pig farmers in Rwanda cited key issues that affect entrepreneurs when it comes to working with their banks. delayed loan processing, acquiring unsolicited money without applying, raising of interest rates without client’s consent, and loan agreements written in foreign languages among others.
Munyakazi Sadate, the Chairman of Karame Rwanda, says that for small and medium-sized entrepreneurs to be able to thrive, they need to have access to money and be given easy access to it.
He says, “Collateral is a problem, and when it comes to these small and medium-sized companies, it becomes even more of a problem. So, in order for them to help us, the first thing is for them to help us get money without having to provide collateral. There are guarantee funds that can guarantee people.”
Munyakazi also says that banks should also change their mindset and practices, and give loans to people without relying solely on collateral.
“Simply ease the loan process for MSMEs” Sam Tayengwa said
Sam Tayengwa, the CEO TransUnion Rwanda said that there is a need to just simplify the loans process for entrepreneurs to grow.
“We are giving loans to common citizens. You have to use simple language and ease the process of acquiring a loan. Let us think about it,” Tayengwa said.
The Head of the Special Projects Implementation Unit (SPIU) at PSF Rwanda, Penny Burabyo, explained that one of the solutions that the launched gateway bring MSME owners is access information on all banks and banking services related to loans and credit, thus bridging the misinformation gap and saving time to travel from bank to bank.
“All banks will post information on loans or other services they have, so instead of a businessperson having to travel from bank to bank looking for a loan, they can go to one platform to get all the information, choose where to go and talk to them to get money to develop them,” Burabyo said.
Penny Burabyo
Stephen Ruzibiza, CEO PSF Rwanda said the new facility will boost the number of MSMEs in Rwanda through different financing initiatives that will contribute to the growth of the sector.
“In line with the NST2 Strategy, the platform is expected to increase the number of MSMEs accessing financial services in Rwanda by end of 2027,” Ruzibiza said.
Stephen Ruzibiza
Steven Biganiro, Director General of Capital Markets and Investments Schemes, Ministry of Finance and Economic Planning said that the obstacles identified by entrepreneurs should be addressed, because in today’s world, there are other ways that banks can use that do not rely solely on collateral.
“The first is to change the way lending institutions examine files. We are in a changing era, where people should not be judged by their collateral, but rather by the business activities, the products, and how they earn rather than focusing on collateral.” Biganiro said
Biganiro noted that there is a need for collaboration between all sectors in fostering how these obstacles can be reduced, in order to help small and medium-sized entrepreneurs access finance.
Steven Biganiro,
