Small and medium businesses in the informal sector have complained of being denied access to affordable loans under the Economic Recovery Fund.
This is because most of them do not have the formal documents that are required by banks to access loans.
Some of the conditions imposed by the Ministry of Finance and Economic Planning urge all the microbusinesses working with Microfinance Institutions (MFIs) and Savings and Credit Cooperative Organizations (Saccos) to be a legally registered business and demonstrate the negative impact of Covid-19 on their operations proven by at least 50 per cent year-on-year, from January till May 2020.
Aimable Nkuranga, executive director of Association of Microfinance Institutions in Rwanda (AMIR) told Rwanda Today that the requirements imposed by the government on the recovery fund have stringently locked out many of those who could be targeted to benefit from the informal sector.
Mr Nkuranga said most requests after the lockdown were for the working capital because most people in the informal sector have spent their working capital to sustain their families during the lockdown.
“In the informal sector, the economic recovery fund intends to benefit people like someone who owns a small shop in the neighbourhood or anyone who has a small ranch in the market place, where he/she sells fruits but the accessibility of the funding is being hindered by the requirements that the beneficiaries have to meet,” Nkuranga told Rwanda Today.
“People we have in the informal sector don’t register their businesses with Rwanda Development Board nor have VAT clearance certificates as required,” said Mr Nkuranga.