The International Finance Corporation has signed an agreement with the national bank that enables IFC to provide local currency loans to support growth of the private sector.

IFC, which is a member of the World Bank Group, offers local currency financing in many countries, usually by entering into swaps with major international banks. As there are currently no banks in Rwanda that are able to provide such long-term swaps, the National Bank of Rwanda (BNR) will provide IFC with local currency through swaps until a commercial swap market develops.

“Through this initiative, the National Bank of Rwanda and IFC will work together to further develop Rwanda’s financial markets to support private sector growth and promote sustainable economic growth,” said François Kanimba, the BNR governor. “We are committed to working with partners such as IFC to develop vibrant and efficient capital markets in Rwanda.”

“IFC is delighted to launch this initiative in partnership with the National Bank of Rwanda,” said Nina Shapiro, IFC vice-president, finance and treasurer. “We look forward to helping develop a long-term commercial swap market in Rwanda that will support the continued growth of the private sector.”

IFC hopes to replicate the initiative in other countries that do not yet have a swap market. Access to long-term local currency enables IFC to extend long-term loans to companies that do not generate foreign exchange revenues and that cannot take on foreign exchange risks associated with borrowing in dollars or other international currencies. Swaps also are a critical part of a robust financial system.

“Promoting a strong financial system is essential for sustainable economic development and an important part of IFC’s effort to reduce poverty and improve people’s lives,” said Janamitra Devan, IFC-World Bank vice-president for financial and private sector development, who signed the agreement in Kigali. “IFC and the World Bank are committed to working with partners such as the National Bank of Rwanda to extend financial services to people and places that need them the most.”

Devan was in the country on a two-day visit last week to highlight IFC’s commitment to supporting the country’s private sector-led economic growth, including the Center for Business Solutions, which provides management training to small business. The visit comes after Rwanda was recently named the world’s top reformer in the most recent Doing Business, a joint report of IFC and the World Bank that provides objective measures of business regulations and their enforcement across 183 economies.

IFC is the only international financial institution focused exclusively on the private sector, the engine of sustainable development in emerging markets. Along with IBRD, IFC is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries.

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