Young business people hurt by lack of loans for capital

Tuesday April 9 2019


A young businessman showcases his stoves during a trade fair in Kigali. Young entrepreneurs are being urged to form co-operatives in order to access loans from banks. PHOTO | CYRIL NDEGEYA  

More by this Author

Lack of capital continues to hinder young people from becoming entrepreneurs, even as white collar jobs for university graduates get fewer.

Young entrepreneurs in Tumba Sector in Karongi District decried lack of access to soft loans, which is hampering the growth of their businesses and advancement of their skills.

They raised these concerns last week when Rwanda Today visited the district to talk to some of the youth who claimed to have skills acquired from technical vocational training schools, but are unable to get capital to start their own businesses.

Venuste Ndayambage, 26, gained skills in electrical installations from Kavumu Technical School, but says lack of capital to start his own enterprise has forced him to turn to offering bicycle rides to earn a living.

“The skills I have are now just depreciating instead of advancing because the more I don’t utilise the skills the more I forget,” Ndayambage said.



The youth are eligible to access collateral of up to 75 per cent from the Business Development Fund (BDF). The move is supposed to encourage banks and other financial institutions to lend money to the youth in order to support their businesses.

But the youth blame BDF for demanding collateral as security to access loans, which also hinders banks from offering them loans.

Fred Rucogoza, who has experience in agribusiness needs capital to reinvest in his business, but says the financial development fund makes it difficult to get collateral to access loans.

“It’s been five months since I submitted all the requirements needed by the BDF branch in Karongi, but wheneverI go there they tell me that my request is still being processed,” added Mr Rucogoza.

“The obstacles include bureaucracy plus countless conditions and paper work attached to the process, which makes it hard to access the services,” he said, adding, “It denies us the opportunity to do business, yet the government has invested greatly in these institutions for our development,” he said.

Mr Rucogoza added that even those who succeed in applying for the loan have to endure a long wait for the money to be disbursed, and this is another obstacle to the business operations.

He said a fault in the systems could be one of the reasons for the frequent delays.

“It appears that some district workers at the BDF offices are not qualified to understand the type of projects that need to be supported and those that don’t qualify,” said Mr Rucogoza.

Vienne Nsanganira, the executive of Tumba Sector said they are aware of the issue and looking at ways to resolve it.

“We’re encouraging the youth to form co-operatives because it’s harder for an individual to access loans or collateral compared with a group of entrepreneurs,” said Mr Nsanganira.

“The youth are required to come up with relevant group projects, if they’re to access Rwanda Development Funds,” he added.“

No co-operative that sought a loan from a bank with a clear and profitable project was denied the funds. We’re ready to link entrepreneurs in co-operatives with commercial banks and development institutions to get for loans,” said Mr Nsanganira.