This is the first financing received by Rwanda from AIIB and the first project financed by AIIB in Sub-Saharan Africa.
The financing will facilitate economic recovery and resilience by addressing financing constraints of private sector businesses post COVID-19. AIIB financing will focus on providing working capital and investment credit line.
This is in addition to US$ 157.5 million (approximately Rwf 157.4 billion) financing approved by the World Bank Board of Directors a week before. The objective of the financing is to alleviate the short and long-term financial constraints of businesses and help them adjust their business to the COVID-19 challenges. The financing will provide lines of credit to financial institutions for on-lending to highly impacted and strategically important sectors and firms.
“This facility will support Rwanda’s Economic Recovery Plan by providing our private sector affected by COVID-19 with affordable working capital and long- term resources for investment, which will contribute to job creation and economic growth,” said Dr. Uzziel Ndagijimana, the Minister of Finance and Economic Planning.
In response to the impact of COVID-19 pandemic on the economy, Government established the Economic Recovery Plan in April 2020 to support sectors mostly affected by the pandemic such as tourism and hospitality, scale up social protection and to protect both businesses and jobs by establishing an Economic Recovery Fund (ERF).
The ERF objective is to: (a) To support businesses in the sectors hit by the pandemic so they can survive, resume work, production and safeguard employment, and (b) expand domestic production during the COVID-19 pandemic and in the post-recovery period. Beyond supporting businesses to recover from the pandemic, the ERF will facilitate investment for high growth potential businesses that have significant domestic, regional and international market opportunity and export growth prospects.
The ERF started with initial US$100 million in June 2020, and with this World Bank and AIIB financing, ERF will increase to USD 357.5 Million. Other contributors to ERF are IMF, OFID and USAID.