Rwanda: USD 315 billion fund planned for Covid-19 recovery

Local businesses have been invited to apply for funding under the Economic Recovery Fund (ERF), a two-year facility established by the Government to accelerate the recovery of Covid-19 hit businesses.

The Fund is an intervention designed to revive business activity and safeguard employment in the wake of the Covid-19 pandemic.

It is also expected to boost domestic production of essential goods such as masks, gloves, sanitizers, disinfectants, and others that may be deemed necessary during and post Covid-19 period.

According to the Ministry of Finance, the fund has started with an initial Rwf100 billion to be distributed towards the hospitality sector loan refinancing, businesses in manufacturing (including agro-processing), transport and logistics as well as small and medium enterprises linked to domestic and global supply chains.

With over 90 per cent revenues lost from cancellations of events and bookings, the hotel industry is the most adversely affected sector.

The government plans to mobilize some additional Rwf200 billion.

Uzziel Ndagijimana, the Minister for Finance and Economic Planning, said the private sector was severely affected by the pandemic.

“The Economic Recovery Fund in addition to other recovery measures will help to overcome the significant hardship brought on by Covid-19 on businesses and individuals and allow them to be in a position to play a meaningful role in our economic recovery,” the Minister said in a statement.

The fund will be disbursed by the Central Bank to commercial banks, microfinance institutions and SACCOs which will then lend to eligible businesses.

The Central Bank has since released a directive on the operationalisation of the fund to all the 16 local banks as well as limited liability micro-finance institutions.

Eligible businesses will have to demonstrate the negative impact of Covid-19 on their operations, that they were commercially viable prior to the pandemic, and that they can return to viability, preserve jobs and contribute to the recovery of the economy.

Applications will be made through respective banks which will conduct a case by case debt sustainability assessment.

Banks will then submit the applications to the Central Bank for review leading up to the final approval.

On approval, banks will disburse the funds to a borrower’s account then submit proof of the disbursement to the regulator who will then credit the Bank’s account with the disbursed amount.