Businesses in Rwanda have been invited to begin applying for funding under the Economic Recovery Fund (ERF), a two-year facility established by the government to cushion businesses affected by the COVID-19 Pandemic.
The recovery fund is an intervention developed to support businesses that have been highly impacted by the crisis so they can survive, restart work and safeguard employment.
The facility 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; hospitality sector loan refinancing, businesses in manufacturing (including agri-processing), transport and logistics as well as SMEs linked to domestic and global supply chains.
The hotel sector is one of the most adversely affected sectors with over 90 percent of revenues lost from cancellations of events and bookings.
There are plans to mobilize additional funds to raise a total of Rwf 200bn in total.
Uzziel Ndagijimana, the Minister of Finance and Economic Planning said that with the private sector severely affected by the pandemic, the Economic Recovery Fund in addition to other recovery measures will help to overcome the significant hardship.
“The private sector has been adversely affected by the crisis which has disrupted priority sectors of our economy. 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 operationalization 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.