IFC: A Part of the Rwandan Renaissance

The International Finance Corporation (IFC), a member of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC provides financial products for private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides advisory services to businesses and governments.  As of July 1, 2007, its total investment commitments in Rwanda stood at $15.166 million. IFC’s approach for Rwanda is in line with the World Bank Group’s country assistance strategy. There are three areas of focus for IFC; improving the investment climate, building the capacity of small and micro enterprises and the institutions that support them, and providing support to projects in the financial, agribusiness, tourism and infrastructure sectors.  

This year, IFC committed US$10 million to two investments in Rwanda-a US$7.5 million investment in Intraspeed, a Warehousing and Freight Company, and a US$2.5 million investment in Hotels de Mille Collines.  

More recently, in October, the IFC announced that it would invest $8.1 million in Tourism Promotion Services Rwanda, which manages the 104-room five-star Kigali Serena Hotel and the 72-room four-star Kivu Sun Hotel on behalf of the Aga Khan Fund for Economic Development. In addition, IFC is providing long term credit and trade finance to two private banks; Commercial Bank of Rwanda (BCR) and BANCOR. 

IFC is currently working closely with the World Bank and the Government of Rwanda to explore the financing opportunity for the Lake Kivu Gas Project. 

In addition to its investment activities, IFC is advising on the privatization of Rwandair Express and has three active advisory services programs running in Rwanda. These are the Rwanda Competitiveness and Enterprise Development Project (CEDP) Leasing Development Program, the Rwanda Entrepreneurship Development Program and the Rwanda Investment Climate Reform Project.  

The Rwanda CEDP Leasing Program is an advisory service that aims at promoting the role of leasing as a financing mechanism for businesses in Rwanda.  The program’s activities include capacity building for the private sector and government around leasing, public awareness and education, and leasing investment promotion. The program does not itself engage in leasing.  

Leasing is an alternative means of equipment financing that can strengthen the activities of small and medium scale enterprises. Leasing is based on the proposition that profits are earned through the use of assets, rather than ownership. Leasing companies focus on the borrower’s ability to generate cash flow from business operations, which makes it particularly advantageous for new, small and medium-sized businesses that do not have lengthy credit histories, nor significant asset-based collateral. 

In emerging economies like Rwanda, leasing is an appropriate way to support small and medium enterprises (SMEs) in acquiring productive assets. The current stability in the economy can further stimulate growth for private sector development if there is an injection of leasing investment opportunities.  

The Rwanda Entrepreneurship Development Program aims at establishing a collaborative partnership with institutions in the country that strengthen and enhance entrepreneurship and small business development. The program also works to strengthen the existing public-private dialogue forum on improving the investment climate by enhancing the policy advocacy capacity of the private sector. 

The Investment Climate Reform project aims at assisting the government of Rwanda’s efforts to develop the private sector by focusing on three broad areas of reform – regulatory simplification, institutional development and legislative support.