Given the past experience of commercial banks with non-performing loans, and also under the influence of the global financial crisis, bank loans are ever harder to obtain. The chief operations officer of Bank of Kigali, Lawson Naibo, says that they have intensified their risk management to reduce bad debts or non performing loans.
One way for banks to cover themselves is to request clients to present assets as collateral for the loan. Yet it has always been hard for investors to come up with sufficient collateral to guarantee their payback. For instance, until now undeveloped land has never been accepted.
Yet with the establishment of the Rwanda Investment Climate Project, a new step has been taken to improve the business climate and make it easier for entrepreneurs to operate. That includes facilitating access to finance.
In most developed countries the private sector has been the engine behind their economic growth. Inappropriate and unnecessary legal, regulatory and administrative barriers to investment and to the operation of markets must be removed to cut down the cost of doing business in Rwanda, if the private sector is to thrive and create wealth.  

Legal vacuum
Land administration systems in Rwanda have largely broken down due to the development of localized, non-standard practices, and the dramatic effect of the introduction of the Organic Land Law in 2005 without simultaneous release of the necessary secondary legislation required to effectively implement its provisions.
Business and land owners in Kigali are largely operating within a legal vacuum and unable to use their land assets as collateral to obtain loans from financial institutions because current land registration systems have been superseded by the provisions of the Organic Land Law. Moreover, the acquisition of a legal title currently takes place after land development process and before it’s fully developed it cannot be used as collateral in financial institutions. It hasn’t been even simple for developers to develop their land due to scrutiny they are put under for better land development.
It is therefore of great importance that existing land rights will be converted into the new form of land rights required under the Organic Land Law and key primary institutions for land registration will be operational. This will provide an efficient system of land registration characterized by simple, transparent procedures which promotes access for all to land markets and secured finance
The project’s implementation structures will compliment those that are already on the ground in relation to existing Government’s programs. In addition, they must enable the institutions that will be involved in implementing land registration and work together effectively towards common objectives. The project will have a steering committee, project management unit and the monitoring and evaluation team.

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