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MFIs REFINANCING October 2009
By Christine KARANGWAYIRE BRD
Director of Investments
Department
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BRD MFIs RefinancingIntroduction
To support Microfinance sector, the GoV
established the credit and the capacity building
funds. The capacity building fund aims at
developing professional management and financial
sustainability of Microfinance Institutions. The
purpose of the credit fund is to provide
sustainable refinancing access to MFIs in form of
external lines of credit and enable MFIs access
liquidity to invest and obtain earnings.   The
managing institutions of the capacity building
fund are AMIR and CAPMER whereas the managing
institution of the credit fund is BRD. BRD had
already identified the refinancing and the
capacity building of MFIs as the main pillars in
the development of the Microfinance industry.
That is why it created a microfinance program
according to the decision of its Board meeting
held on July 9th 2002.
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BRD MFI REFINANCING BRD Vision, Mission and
Strategic Priorities
To be the most profitable bank at the service of
poverty in financing priority sectors of the
Rwandan Economy.
Vision
Mission

• To become the Government of Rwandas investment
  arm by financing the nations development
  objectives with a focus on the priority sectors
  of the economy.

Strategic Priorities

• Mobilize financial resources to drive Rwandas
  development
• Develop special financing programs for key export
  sectors
• Expand BRDs product portfolio to meet customers
  needs
• Engage and support key customers and partners
• Promote Microfinance Services
• Increase BRDs effectiveness through
  reconfiguration and
• training

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BRD Agriculture FinancingBRD New and Old Products
LOANS
EQUITY
LEASING
TRADE FINANCE
AGENCY FUNCTIONS
MICROFINANCE
GUARANTEE FUND
ADVISORY SERVICES
DEPOSIT MOBILISATION
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BRD MFI REFINANCINGBRD Lending Conditions
A detailed feasibility study or business plan for
the project
Proven technical capacity in the field of the
project  
Demonstrated capacity to manage the project
GENERAL CONDITIONS
Adequate market share  
30-50 participation by promoter of investment
(15 for cooperatives)
Guarantee to secure the loan
Interest rate of 10-16.
FINANCIAL CONDITIONS
Repayment period Varies and can be up to 10 years
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BRD MFI REFINANCING BRD General Lending Conditions

Project financed
Mortgages with title deeds
Pledge of receivables or resources
The joint guarantee of spouse or any other partner
Guarantees
Guarantee fund
Accidents and fire insurance, etc..
Solidarity guarantee / caution solidaire
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BRD MFI REFINANCINGBRD Experience Financing -
Figures
Total BRD Portfolio amount to RWF 31.8 Billion .
RWF 29.6 Billion are in DDI and RWF 2.3 Billion
are in FOREDEM
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BRD MFI RefinancingBRD Experience in MFI
Refinancing
Activities Number of Projects Value of projects Comments
Loans applications 22 4 003 717 172
Loans approved 10 1 600 000 000 Loan agreement in process for 2 MFIs
Loans disbursed 8 1 320 000 000
Loans rejected 8 2 524 156 400 The reasons of rejection differ from the institutions to another.
Portfolio as at 31st August 09 8 796 493 030 87 are loan in class 1, 9 in class 2 and 4 in class 4, 3 are in arrears.
Pipeline as at 30th September 09 2 70 000 000
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BRD MFI REFINANCINGIssues for MFI refinancing

• No BNR license of the MFIs
• No legal status of the MFI
• Weak management of the MFI
• Weak performance of the MFI
• Lack of guarantees
• Insufficient profitability of the business
• Insufficient experience of the MFI
• High level of leverage and be classified as a bad
  debtor in banking sector

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BRD MFI REFINANCINGIssues for MFI refinancing

• Lack of transparent norms and performance
  indicators,
• Lack of transparent pricing policy of products
  and services
• Poor governance of MFIs
• High rates of non-performing loans for the MFIs
• Lack of sufficient equity
• low level of MFIs deposits
• Week Management Information and internal control
  Systems.

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BRD MFI RefinancingBRD Initiatives in Addressing
Issues Hampering the MFI Refinancing

• Guarantee funds that provide partial guarantees
  (SME Guarantee fund, SMGF, FAGACE)
• Capacity building and Technical assistance trough
  BRD Advisory Services
• Partnership with Microfinance stakeholders
• Updated Criteria and Conditions of refinancing

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BRD MFI RefinancingBRD Criteria and Conditions
for the MFI Refinancing

• NPL less than 10
• BNR Reporting requirements,
• BNR Governance Standards,
• The amount of credit to be given by BRD should
  not exceed 20 of the MFI total deposits,
• 80 of the MFI loan portfolio should be in
  productive sectors and MFIs should be present in
  rural area,
• No additional guarantees will be required apart
  from MFIs assets,
• BRD will refinance MFIs at 6 and MFIs will
  finance their clients at reasonable interest
  rate, agreed on with BRD.
• NB Microfinance Banks are excluded from eligible
  MFIs to be refinanced, they have access to other
  resources,

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BRD MFI RefinancingDocuments to presents when
requesting refinancing

• Application letter
• BNR License
• BNRs report for 3 quarters
• Legal Status ( Ubuzima gatozi)
• Business Plan for 5 years,
• Audited Financial statements for 3 years,
• Portfolio and loan aging reports,
• Credit Policy,
• Memorandum and articles of association(
  statuts)

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THANK YOU !!
QUESTIONS, COMMENTS ?