Developing Financial Instruments and supporting the financial landscape in Rwanda
Experience to date has shown that there are many obstacles to the effective deployment of financing instruments and that as a result, the rate of deployment has been low. Africa RISE has been supporting Rwanda to identify projects requiring investment so that appropriate instruments could be developed adopted to overcome challenges and allow for successful application of the available financial instruments.
Rwanda aspires to become a leading pan-African hub for local, regional, and international sustainable finance as outlined in its Sustainable Finance Roadmap, launched in October 2022. Rwanda’s Financial Sector Strategy is a long-term development strategy that steers the financial sector, geared at making the country an international service centre. The overarching vision is to develop a stable and sound financial sector that is sufficiently sustainable to address the economy’s development needs. The aim is to integrate Environmental, Social, and corporate Governance (ESG) considerations into the local business models and lending practices.
Rwanda’s financial sector has already made substantial progress towards becoming more inclusive and modern. The country has started to attract large-scale investment opportunities in new and upcoming sectors, including green and sustainable financing and FinTech. Rwanda has already taken steps towards the transition to an increasingly sustainable economy. Rwanda’s financial centre, also known as The Kigali International Financial Centre (KIFC), recognises the role that the financial sector needs to play in driving the country’s sustainable growth through capital mobilisation and allocation of economic resources. It should be recognised that when financial services reach out to the population broadly and efficiently, they accelerate economic growth, efficient allocation of resources and improved wealth distribution.
Global Gateway, the new European Strategy to boost smart, clean and secure links in digital, energy and transport and strengthen health, education and research systems across the world, launched by the European Commission in 2021, has been looking into innovative ways to support developing countries and boost private investment. The European Fund for Sustainable Development Plus (EFSD+) is the main financial tool to mobilise investments under Global Gateway. The EFSD+ includes guarantees, grants provided through ‘blending’ (a mix of EU grants with bank loans), technical assistance to help improve the quality of projects and the implementation of reforms other support tools to support the development of partner countries.
A key objective of Africa RISE’s support in this assignment was to create a pipeline of private sector projects in Rwanda. On the other hand, our team identified specific financing mechanism that could support these projects. Our team is also proposing instruments that should be set up to further develop the ecosystem.
It is also worth noting that our consultants participated in the EU-Rwanda Business Forum in July 2023 as panelist to discuss about the financial ecosystem of Rwanda.