Rwanda: Private-Sector Access to Finance for Post-COVID Recovery and Resilience

approved

The Project is supported under AIIB's COVID-19 Crisis Recovery Facility (Facility) and will be co-financed with the World Bank (WB), through the International Development Association (IDA). The Project will provide financial support to the government's own Economic Recovery Fund (ERF), a Fund created to support businesses most significantly affected by COVID-19 in Rwanda. The ERF was established in June 2020 and capitalized with USD 101 million by the Government of Rwanda. The Project will comprise 4 components: 1. Component 1 - Liquidity and recovery facility 2. Component 2 - Risk-sharing facility, to provide partial credit guarantees and de-risking mechanisms to MSMEs, in support of Component 1 3. Component 3 - Institutional strengthening and implementation, in support of Component 1 4. Component 4 - Contingency Emergency Response Component AIIB will only finance sub-component 1c (comprising working capital and investment credit line), under component 1. The Ministry of Finance and Economic Planning (MINECOFIN) will be the coordinating entity. Implementing agencies for the various sub-components of the Project are as follows: 1. Business Development Fund (BDF) for: on-lending to micro-finance institutions for subsequent on-lending to micro-businesses, for working capital and investment financing - under component 1, sub-component 1a. the provision of partial credit guarantees and de-risking mechanisms to borrower MSMEs - under component 2; 2. Rwanda Development Bank (BRD) for: refinancing of loans to businesses in defined sectors - under component 1, sub-component 1b. direct lending, and on-lending via commercial financial institutions, to large companies and SMEs, for working capital and investment financing - under component 1, sub-component 1c. Component 3 comprises technical assistance to both BDF and BRD, for institutional strengthening and implementation support activities within these institutions. Component 4 is an unfunded, contingency component that can be activated in case of a relevant emergency event; if triggered it will draw on uncommitted WB loan resources under the Project.