Photo credit: Vulcan Post
The Monetary Authority of Singapore (MAS) and the National Bank of Rwanda (NBR) have launched an initiative that will help small and medium enterprises access trade finance. The Rwanda Imbaraga SME Ecosystem (RISE) programme uses alternative data to access credit worthiness of small businesses, which could help banks extend finance to those who cannot come up with detailed financial records and asset-based collaterals. The aim is to strengthen the capacities of Rwandan SMEs for participation in both domestic and cross-border commerce, while also enhancing their access to trade financing.
The programme – set to be operationalised by the Singaporean firm Proxtera - a digital platform facilitating international trade, and the Business Development Fund of Rwanda – consists of three primary components: improving access to finance, expanding trade opportunities via B2B marketplaces, and offering courses on financial literacy.
African firms often grapple with significant obstacles in terms of accessing trade finance, with only about 40% of African trade being bank intermediated, compared to an 80% global average. The African Development Bank reports a decrease in bank participation in trade finance activities over the past decade, leading to an estimated trade finance gap of US$82bn in 2019. SMEs in Africa face hurdles in securing trade finance due to the informal nature of their operations, a lack of audited financial records, and minimal digital transaction data, all of which complicate creditworthiness assessments by banks. Additionally, these businesses often face rigorous collateral requirements, as banks aim to safeguard against non-payment due to local legal enforcement shortcomings.
The RISE project is designed to address these shortcomings. This approach may overcome the shortage of standard business records, supplying financial institutions with supplementary information to streamline lending to SMEs, consequently enhancing their access to international markets.
The programme further seeks to generate new and expanded trade opportunities, not just within Rwanda but also between the East African country and the rest of the world, including Singapore, through B2B marketplaces. With exports like mining commodities (including gold, tin, tantalum, and tungsten) and agricultural products (such as coffee, tea, horticulture, and livestock), Rwanda has much to offer. Last year Rwanda participated in the Singapore Specialty Coffee Auction to grow its exports to Asian markets. Furthermore, a UK-government funded initiative, Manufacturing Africa, highlighted Rwanda’s substantial horticultural export potential to markets ranging from Europe to China, particularly for items like shiitake mushrooms, fresh and juiced passion fruit, beans, and chili products.
In 2021, Rwanda's primary exports included gold (US$368m), refined petroleum (US$107m), tin ores (US$99.2m), and tea (US$90.1m). The chief destinations for these exports were the Democratic Republic of the Congo, United Arab Emirates, Thailand, Ethiopia, and Pakistan. On the other hand, Rwanda's import list included palm oil (US$128m), vaccines, blood, antisera, toxins, and cultures (US$120m), and electric generating sets (US$119m). Its main import partners were China, Tanzania, United Arab Emirates, Kenya, and India.
Trade between Rwanda and Singapore, although limited, is growing by an average of 15.2% per year since 2000. In 2021, Rwanda shipped mostly primary commodities worth US$24.7m to Singapore and imported goods worth US$15.7m. The bulk of Singapore exports consists of refined petroleum, palm oil, and other vegetable oils.
‘Confirming banks and trade finance in Africa’, African Development Bank, 28 January 2022
‘Rwanda takes part at the Singapore Specialty Coffee Auction’, National Agricultural Export Development Board, 31 October 2022
‘High finance costs crimp cross border trade in West Africa’, NTU-SBF Centre for African Studies, 26 December 2022
‘Monetary Authority of Singapore and National Bank of Rwanda collaborate on the Rwanda Imbaraga SME Ecosystem’, Monetary Authority of Singapore, 28 June 2023
‘Horticulture: The Rwanda opportunity’, Rwanda Development Board, Accessed 26 July 2023
‘Rwanda/Singapore’, OEC, Accessed 26 July 2023
‘Exports & Manufacturing’, Rwanda Development Board, Accessed 26 July 2023