BCR and IFC to promote trade
Both importers and exporters are set to gain from a recently signed partnership between the International Finance Corporation (IFC) and the Commercial Bank of Rwanda (BCR), where the former will provide a guarantee facility for trade finance worth US$2 million in direct guarantee funds.
The guarantee will help in covering payment risk and help increasing Rwanda’s trade volumes.
BCR is the first Rwandan bank to join IFC’s global trade finance program. IFC issues the guarantee to BCR to support payment commitments of BCR.
“Working with IFC will greatly increase our capacity to facilitate trade between Rwanda and other countries, promoting the private sector and contributing to the economic development,” David Kuwana, the managing director of BCR said.
He added that the development of exports is a key to Rwanda’s development, since it will create employment and earn the country foreign exchange, thus making it less dependent on foreign aid.
Kuwana also said that BCR was already financing foreign trade from it own reserve of foreign exchange, but with the funds from IFC the bank will be able to accommodate more traders.
He said that the agreement generally targets importers and exporters. “For example, if a trader wants to import goods from China, all he must do is to contact an IFC-affiliated bank, which will provide a guarantee so that the seller will be assured that he will be paid.”
He further said that the IFC is not only providing the guarantee money, but it also offers technical assistance through capacity building, training of employees and through services that banks are offering such as leasing.
The BCR director also highlighted the need to do business formally, as it is easier and less cumbersome than the informal way. “At this moment the import and export business is largely done on a cash basis. The more formal the business becomes the better for our economy,” he said.
David Kuwana further said that with Rwanda’s development based on increasing exports, BCR will put more emphasis on exports; yet he insisted that the facility is meant for both importers and exporters.
The BCR director explained that the partnership is the first among many other partnerships they are currently discussing. “We are currently discussing facilities for small and medium enterprises as well as for women entrepreneurs, and incentives for helping to set up schools,” David Kuwana said.
Global trade
IFC Vice president and CEO Lars Thunnel said that IFC is an institution devoted to trade that is important for a small country like Rwanda. “Trade finance is part of IFC’s strategy to help Africa become fully engaged in global trade,” Lars Thunnel said.
The IFC global trade program was launched back in 2005 to support trade with emerging markets worldwide and promote flows of goods and services between developing countries.
It provides guarantee coverage of bank risk in emerging markets, allowing traders to expand their trade finance transactions within an extensive network of countries and banks, thus enhancing their trade finance coverage.
The program has provided approximately US$ 1.5 billion worth of guarantees issued to banks in developing countries. It has further supported US$ 2.2 billion in trade globally since 2005, with US$ 1.2 billion going to sub-Saharan nations.
The program includes 29 issuing banks as participants in 15 sub-Saharan countries including, conflict affected countries such as Burundi, the Democratic Republic of Congo, Liberia and Sierra Leone.
Posted by The Rwanda Focus
on Dec 2 2007. Filed under National.
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