Posted on March, 25, 2022 at 08:16 am
The National Industrial Research and Development Agency (NIRDA) has announced that local farmers that manufacture animal feeds (pigs and poultry) will be able to access loans in banks at 8 percent interest rate.
The move funded by Enabel, the Belgian Development Agency, is aimed at ensure the firms boost productivity and competitiveness of their respective products.
The Development Bank of Rwanda (BRD) has been assigned to manage the funds and will work with other commercial banks, microfinance institutions, SACCOs to provide the subsidized loans to the eligible firms.
Pig and poultry farmers, firms that add value to stone and clay will also benefit, NIRDA said.
A total of 2.3 million Euros (about Rwf2.5 billion) will be invested in supporting the value chains, officials said.
Firms in the piggery, poultry and animal feeds value chain will benefit from 1.8 million euros while those in the clay and stone value chain will share 500,000 euros.
The current cost of finance at an average of 21 percent interest rate in different financial institutions, strict collateral and administrative requirements were hampering SME’s efforts to access finance.
The challenge is in addition to the long process in acquiring loans from banks.
The funds will serve to de-risk investments in the value chains and reduce the barriers for investment to the value chain actors.
“We believe that this is a huge contribution that will offload companies and enable them to acquire loans that they will be able to service-hence use the loan to improve their productivity and competitiveness,” said Dr. Christian Sekomo Birame, NIRDA Director general
He added that the subsidies were timely because companies shy away from seeking loans in financial institutions due to high interest loans they are charged among other factors.
So far the agency is in the final stage to support selected firms that will acquire upgraded equipment, technical support, and business advisory services through its Open Calls Program.
All beneficiary companies applying for loans will first be required to comply with the loan criteria of their respective bank, MFIs or SACCOs.
Kampeta Sayinzoga, BRD’s Chief Executive Officer reiterated that the interest rate subsidy is a positive move as it would offload those who may seek loans from commercial banks, Microfinance institutions and saving and Credit Cooperative (SACCO).
She said the high interest rate that banks charge was a big issue adding that firms will now pick interest in securing loans with subsidized interest rates.
“This will boost economic growth and reduce poverty as it provides reduced interest rates and accessible and affordable long-term financing for SMEs.”
Source: The New Times