Banks and other financial institutions in Rwanda have been challenged to offer credit for the production of export goods to increase appetite for their services.

With a growing trade deficit, which has widened by 5.1 per cent in the first half of 2016, banks are grappling with low credit appetite from exporters, who have shunned export growth facilities.

Development Bank of Rwanda (BRD) set up the export growth facility last year, a single facility with three separate windows — an investment catalyst fund, a matching grant fund for market entry related costs and an export guarantee facility — to increase demand for its financial services.

“People are not coming for the export facility, exporters keep saying capital is a problem, why are they not coming,” said Manzi Benjamin, the head of exports investment division at BRD.

Maurice Toroitich, the managing director of KCB said there is a low appetite for export credit products because banks have largely focus on final stages instead of production.

“Before looking at exports, the focus should be put on the product, banks need to finance the production stage, to build products that are competitive on the export market, in quantity, quality and price,” Mr Toroitich said.

“Most export facilities look at providing bank guarantee to cater for transport, cold storage, freight, but a lot of our exporters are still grappling with the product, that is why they are not coming for this money,” added Mr Toroitich.

“As banks we need to start financing production of export products, someone needs to invest in production value chains, there is no way around it,” he added.

Rwanda’s exports are mainly made up of traditional crops like coffee, tea, minerals and is also investing in horticulture to generate more revenue.

“Export is about products; when you don’t have a product on the market, and lack the capacity to market it you can’t survive, banks don’t look at this as important but it’s key. Credit should not only be for production and transport, but marketing as well,” said Janet Nkubana, the managing director and co-founder of Gahaya Links, and exporter of crafts and textiles.

“Some banks just copy and paste what is done elsewhere, without deepening production lines and marketing, the money will stay in the banks,” she noted.

The government has been lobbying for the country's products to access the international and regional markets, however, the goods have not been competitive due to high cost of production.

Laurent Demuynck, the proprietor of Kigali farms, dealing in horticulture for export said some interventions by the government and banks to not respond to the needs of the business community.

“Sometimes subsidies are difficult, they can look attractive but difficult not practical to exporters. Whoever gives a subsidy wants something in return, the issue could be on how much overhead is required, the devil is in the details,” he noted.

According to him, banks like Atlas Mara are providing services like post shipment finance, and facilitate exporters after they cross the border to shield them from foreign exchange risks and other risks related to export business.

“Once you cross the border, the issues of letters of credit become a problem, if a bank has connections, it takes away risks,” he observed.

Mineral exporters, for instance Rutongo miners, and other exporters said they are not aware of credit facilities being offered to exporters by banks.

The facilities target SMEs, who export up to 40 per cent of their production, with a turnover ranging between, $50,000 to $1 million.