Supporting access to finance for enterprises through banking

According to the Ministry of Trade and Industry (2017), 95% of companies in Rwanda are micro, small and medium-sized enterprises (MSMEs), accounting for 41% of private sector jobs. Despite their key role in the economy, MSMEs face major obstacles to growth, particularly in accessing financing.

A 2017 study estimated the financing needs of Rwandan MSMEs at  439 billion RWF (approximately €432 M), representing 6% of the country’s GDP. Businesses pointed to a lack of information on financial products, high interest rates (especially for agricultural MSMEs), and high collateral requirements—often between 120% and 200% of the loan amount—as major barriers to obtaining credit.

Banks also faced constraints: insufficient reliable financial information on SMEs, difficulty in assessing credit risk, and lower profitability of SME loans compared to corporate lending. In response, the Government of Rwanda adopted successive policies, from Vision 2020 to Vision 2050, aimed at diversifying the economy and strengthening MSMEs through improved access to finance.

AFD supported the Bank of Kigali in significantly expanding its credit offer to very small, small and medium-sized enterprises in Rwanda, with the aim of doubling the proportion of MSME loans in its portfolio. The financial component of the project consisted of a $20 M loan to refinance the bank’s medium- and long-term loans to eligible enterprises, helping overcome the structural lack of adapted financial products for this segment. 

In parallel, a technical assistance program of €300 K helped strengthen the Bank of Kigali’s operational and strategic capacity in MSME financing. This included the development of a more sophisticated credit scoring system, the enhancement of loan monitoring tools, the design of new financial products better tailored to SME needs, and targeted staff training. The technical assistance also supported the bank improve its services for MSMEs by expanding digital channels and non-financial support, while also strengthening its environmental and social risk management framework.

Through these combined measures, the project aimed to consolidate the Bank of Kigali’s position as a leader in SME finance and contribute to inclusive economic development in Rwanda.

The financing for this project is as follows: Loan ($20 million) and Grant (€300,000).

The project produced significant results for Rwandan MSMEs, the Bank of Kigali, and the broader financial sector, as confirmed by an evaluation.

• Refinancing supported 83 SME loans worth RWF 15.9 billion (~USD 16 million)

• 554 new jobs were created, of which 304 for women.

• 86% of surveyed SMEs reported an increase in turnover after receiving loans, and 45% expanded their workforce.

• The Bank of Kigali’s capacity to serve MSMEs was strengthened, with new credit scoring tools, adapted products, and enhanced environmental and social risk management.