Competitiveness and Enterprise Development Project Phase II
- Reference: P-RW-KF0-003
- Approval date: 29/12/2008
- Start date: 04/09/2009
- Appraisal Date: 12/09/2008
- Status: OngoingOnGo
- Implementing Agency: MINISTERE DU COMMERCE,DE L'INDUSTRIE ET DES COOPERATIVES
- Location: NATIONAL
The development objective of the project is to contribute to enterprise competitiveness in Rwanda. Two other subsidiary objectives, which reinforce the key objective, are promoting access to financial information through the Credit Reference Bureau (CRB) and preparation for Basel II to strengthen risk-based banking supervision. Both subsidiary objectives will contribute to making the financial sector an effective anchor for private sector growth.
Thus, the project focuses on two beneficiary institutions namely, the Rwanda Development Board (RDB) [see Annex C2] and the National Bank of Rwanda (BNR).
The project has 3 components:
1 - Support to Rwanda Development Board (RDB): operationalization of the RDB, Strategic Investment Promotion, and Enterprise Development.
2- Support to BNR: Improving access to credit and financial information, Strengthening Banking Supervision and Preparation for Basle II
3- Project Coordination: Operating Cost
The main objective of the CEDP-II is to enhance enterprise competitiveness in Rwanda. Two other subsidiary objectives, which reinforce the main objective, are promoting awareness on the Credit Reference Bureau (CRB) and preparation for Basle II to strengthen risk-based banking supervision.
The rationale of the project is to further address the weaknesses in Rwanda's private sector environment and the high cost of doing business in the country. These have negatively affected the competitive position of Rwanda as a preferred destination for foreign investment in the region. To this effect, the Government of Rwanda (GoR) has established the RDB to spearhead investment and export promotion in the country. The new institution needs sustained support to execute its mandate. Getting credit (especially by SMEs), rated 139 out of 181 in the 2009 World Bank Doing Business (DB) report (based on 2008 assessment) is one of Rwanda's weakest DB indicators and a critical constraint to enterprise development in Rwanda
The need to support the GoR's efforts at improving the investment climate and DB indicators provides the most important rationale for making the RDB the central focus of the Bank's intervention. The new institution is now the most important organ for promoting competitive business environment in Rwanda, in view of the country's private sector-led development strategy. The establishment of RDB, by consolidating seven institutions (see Annex C2) formerly responsible for various investment and export activities, will result in savings on their administrative budget, create and enhance synergies and further improve service delivery for the private sector in general. The ADB Bank's intervention will support the newly established entity to deliver on its mandate in a more sustained manner
The intervention in BNR will also support critical national development efforts. The GoR is putting emphasis on financial sector reform as an anchor for private sector development. There is also the need to facilitate access to credit, which is one of Rwanda's weakest DB indicators. To address this weakness, the GoR is in the process of enacting a law and providing the regulatory environment to allow a private company to operate a CRB in Kigali. CompuScan, a company already operating in East and Southern Africa has expressed interest in operating the CRB. The Bank's support will assist the BNR to put together an aggressive public awareness and credit skills training to facilitate access to the services of the CRB by its potential clients (creditors and borrowers, especially SMEs and microfinance institutions).
Project benefits include improved skills in critical aspects of investment and export promotion, access to credit by availing information/credit profiles of borrowers to lenders, credit and risk-based supervision; as well as reduced cost of doing business in Rwanda due to improved Doing Business indicators. The beneficiaries will participate in the project through training, public awareness programme and close consultations in the process of policy and program formulation and implementation.
MALLBERG Ragnvald Michel - OSGE2