AfDB signs USD 12 million line of credit with Bank of Kigali
The African Development Bank (AfDB) and the Bank of Kigali today signed a USD 12 million line of credit and a USD 500,000 grant agreement for technical assistance from the Fund for African Private Sector Assistance (FAPA). The AfDB’s line of credit will improve the Bank of Kigali’s liquidity and improve its ability to support key economic sectors, such as infrastructure, manufacturing, agri-business and tourism.
As well as boosting economic growth, the line of credit will generate employment and business opportunities, especially for micro-, small- and medium- enterprises.
The technical assistance grant will strengthen the capacity of the Bank of Kigali as it pursues its strategy to bank the unbanked population and increase financial services in Rwanda. It will improve the Bank’s capacity, including designing and implementing environmental policy and aligning it to Rwanda’s commitment to environmental conservation for sustainable economic development.
The AfDB’s financing and support to the Bank of Kigali is in line with the Rwandan government’s strategy to deepen the availability of banking services by supporting local Rwandan banks and microfinance institutions in their efforts to expand banking services to rural Rwandans. This will help promote agricultural growth and the growth of micro- small- and medium- enterprises.
James Gatera, managing director of Bank of Kigali Limited. said: “I am pleased that the Bank of Kigali is once again able to secure wholesale funding at competitive rates. This credit line will enhance the Bank’s ability to increase provision of financial services in Rwanda. In addition capacity building remains a critical issue in the industry and the grant will advance the capabilities of our staff and systems thus improving service delivery.”
The Bank of Kigali, the largest bank currently operating in Rwanda, is well positioned to channel funding to micro- small- and medium-enterprises and infrastructure projects.
Supported by the AfDB’s combination of financial credit and technical assistance, the Bank of Kigali is expected to expand its corporate and small and medium enterprise client base from the current 4,802 to 26,000 by 2017 It also aims to increase micro- small- and medium-enterprise share to 77 percent, and the number of loan customers from the current 3,018 to at least 5,000 by 2017. Of this, at least 70 percent are likely to be small and medium enterprises.
The AfDB estimates that 2,075 jobs will be generated in the sub-projects financed with resources from the line of credit. Approximately 60 percent of jobs created will be for skilled workers and the beneficiary companies will likely increase their incomes by about 10 percent over the same period.
“The AfDB’s credit facility intervention will help Rwanda’s financial system by making long-term financing available to the Bank of Kigali and its clients, especially local small and medium enterprises” said Negatu Makonnen, AfDB’s resident representative in Kigali. “By supporting the growth of local companies, the line of credit will indirectly facilitate job creation and economic empowerment of the beneficiaries, including women and youth, through increased revenues, increased income, and increased capital,” he added.
The AfDB’s public sector lending operations in Rwanda currently amount to USD 966 million, comprising multi-sector investments in agriculture, transport, human development, public utilities, finance, and industry, mining and environment.
The AfDB has also approved five on-going multinational projects amounting to USD 179 million. From its private sector window, the AfDB is funding eight projects amounting to USD 87 million. This includes financial and technical assistance to the private sector through the Banque Rwandaise de Développement (BRD) and the Bank of Kigali, and direct financing of productive investment projects such as CIMERWA for cement production, and Kivuwatt Power for clean energy.
About The Bank of Kigali
Established in 1966, Bank of Kigali (RSE: BoK) is the largest bank in Rwanda by total assets, with a 30.9 percent market share as of 30 June 2011. The Bank has 42 branches in Rwanda and provides commercial banking services to over 100,000 individuals and over 13, 000 corporate and SME accounts.
In 2011, the Bank became the second domestic company to be listed on the Rwanda Stock Exchange. It has a credit rating of A+/A1 by Global Credit Rating Agency from South Africa. In 2009 and 2010, the Bank of Kigali was been recognized as the Best Bank in Rwanda by emeafinance, in addition to Bank of the Year by the Financial Times.
Technical contact: Line Picard.