The Development Bank of Rwanda (BRD) will almost double its export guarantee fund to Rwf15 billion in 2017 from the current Rwf8.5 billion but the relatively small number of eligible firms means many mass producers are still locked out.

The fund that has grown exponentially from Rwf1 billion in 2015 to Rwf8.5 billion this year is expected to expand by 76.4 per cent in 2017, in support of a drive to reduce the widening trade imbalance which has been putting pressure on external reserves.

But many small and medium scale enterprises, potential candidates for export subsidies still find it difficult to access the money. The challenge, according to experts is that only businesses with a certain level of capital, track record and equity are benefiting from the guarantee fund while many mass producers remain ineligible.

Alex Kanyankole the BRD chief executive urges patience.

“The bottom line is a bankable business plan describing the business activity, assumptions, numbers and investment plan,” he said adding, “exporters have to start small and grow big.”

The fund has three components including the matching grant where exporters access 50 per cent of market entry-related costs.

It is understood that the high market costs make Rwanda exports uncompetitive both on the local and international markets. But under the matching grant component, SMEs can borrow from as low as Rwf40.7 million ($50,000) to Rwf814.5 million ($1 million) from commercial banks in pre-export finance.

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Rwf6 billion in export guarantees was given out between 2015 and 2016 according to BRD. The number of firms that have failed to get access to the fund could be a pointer to the growing demand for credit demand by the private sector.

The National Bank of Rwanda has reported a slowdown in outstanding credit to the private sector between December 2015 and June 2016 due to the base effect and the slowdown in the economic activity, particularly during the second quarter of the year and short maturity of new authorised loans by the banking sector.

“We are disappointed with the commercial banks for not disbursing the money (EGF),” said Jessie Kalisa Umutoni, managing director G-Mart, a manufacturer of chalk in Rwanda.

“The fund should be transferred to Business Development Fund (BDF),” Ms Umutoni one of the panelists during the discussion suggested.

The complaint was raised during the Made-in-Rwanda Symposium organised by the Private Sector Federation in conjunction with Ministry of Trade, Industry and East African Affairs at Gikondo Expo grounds on December 19 which noted that beneficiaries have not accessed the money.

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Using the fund, government is also footing a partition of interest rates on credit an intervention which has made borrowing affordable for exporters.

Currently, the fund covers 6.5 per cent of the interest rates while the exporter meets the remaining. The current average interest rate is 18 per cent but at times the borrowers are charged 24 per cent.

Using the guarantee fund, commercial banks can now fund 80 per cent of market entry related costs that the exporter pays after six months.

The intervention through subsidies is looked at as critical for a government seeking to increase export earnings to the Rwf4 trillion the country targets by 2020.

Current export statistics from National Bank of Rwanda indicate for the year ending 2015, exports fell by 6.8 per cent in value to $558.8 million (Rwf455 billion) from $599.8 million (Rwf488.5 billion) in 2014, brought down by depressed global prices.

The falling exports partly explain why the foreign reserves are low. They had dropped by $32 million by end of December reducing the months the money could sustain imports of goods and services to 3.6 months from a high of 4.8 months in 2013 exposing the country.