The International Finance Corporation (IFC), a member of the World Bank Group, today announced a $10 million subordinated loan to I&M Bank (Rwanda) to strengthen the bank’s capital base.
The finance is also expected to help increase lending capacity of the Bank to small and medium enterprises, promoting job creation and economic growth in Rwanda.
IFC’s investment will focus on supporting smaller businesses operating in Rwanda’s tourism, agriculture, and trade and commerce sectors, the backbone of economic growth in the country. Services account for about half of Rwanda’s gross domestic product, while agriculture generates 31.5 percent.
I&M Bank is the oldest financial institution in Rwanda, and one of its largest. By promoting increased access to finance for underserved SMEs, I&M Bank is supporting the Government of Rwanda’s Vision 2020, a strategy that aims to transform the country into a knowledge-based, middle-income country, and a regional technology and finance hub.
Robin Bairstow, Chief Executive Officer of I&M Bank Rwanda, said, “We are delighted with the continued partnership between IFC and I&M Bank. We have built a solid SME portfolio, and by training our clients in financial skills’ workshops, we have seen their businesses strengthen and grow. Thanks to IFC’s support, we will explore new and evolving sectors like tourism, energy and agri-business, while continuing to exert considerable influence on existing businesses.”
Oumar Seydi, IFC Regional Director for Africa, said, “Expanding SME financing, especially in developing economies where risks are higher, is an important pillar of IFC’s strategy. This facility will allow I&M Bank to reach underserved SMEs in Rwanda, and have a significant impact on growth and job creation.”
SMEs account for 98 percent of all businesses in Rwanda, and contribute more than half of its total gross domestic product. However, most lack sufficient access to finance, leading to an estimated $1.2 billion finance gap. IFC’s loan will promote access to finance for SMEs, and other underserved market segments in Rwanda.
IFC is playing a significant role in improving financing for SMEs, which are a source of growth, jobs and innovation. However, access to finance remains a leading constraint to SME growth in Sub-Saharan Africa, where 350 million new jobs will be needed in the next 20 years.
Small businesses account for 30 to 60 percent of the gross domestic product and 67 percent of jobs in the region. Globally, in 2016, 400 of IFC’s SME finance clients extended an estimated eight million SME loans.