Implementation Arrangements
Rural Financial Services
The implementation of the Rural Financial
Services sub-component is dependent on the continuing evolvement
of the environment for microfinance within the framework of
the new NBR microfinance legislation. comes into effect –
and an assessment of the performance of the two contracted
MFIs and the implications for the microfinance strategy for
the Programme.
A comprehensive strategy for the sub-component
will be developed, to take into account the changes occurred
further to the implementation of the Rwanda National Bank
instruction on micro-finance. This strategy will be devised
by the Rural Financial Adviser who will be part of the Rural
Economic Transformation Team, with the support of a specialised
international consultant, who will be recruited by the PCU.
The development of the strategy will involve: (i) establishing
contracts and agreements with service providers and monitoring
their implementation; (ii) helping to ensure that the
rural poor have sustainable access to financial services;
(iii) identifying institution-building needs of MFIs, the
Rural Microfinance Forum and other partners as appropriate
and organising the provision of related support; (iv) ensuring
coordination and complementarity with the interventions executed
under the sub-components, ‘Production/Market Support for Agricultural,
Livestock and Forest Development’ and ‘Rural Enterprise Development’;
(v) following the progress and lessons learned from the
pilot project implemented by CARE and proposing possible interaction
with UCRIDP as appropriate; and (vi) monitoring the implementation
and impact of the sub-component, in collaboration with the
M&E specialist.
Channelling of credit funds. Resources
allotted to the credit facility and the SME credit line will
transit through the central bank, based on a subsidiary loan
agreement to be negotiated by the government and IFAD.
A specialised consultant will be hired for preparing the
agreement and for setting up appropriate mechanisms to channel
credit resources for both the credit facility and the SME
credit line. Basic orientations in this regard are provided
hereafter.
NBR will on-lend credit resources from the
credit facility to a commercial bank, which in turn will refinance
partner MFIs and possibly UBRP. The bank entrusted with the
responsibility of managing the credit facility on behalf of
the Programme will be selected on a competitive basis. Managing
the credit facility will include: (i) appraising MFIs refinancing
request; (ii) channelling funds; (iii) ensuring timely repayment;
and (iv) accounting and reporting to the PCU. Provisions will
be made to ensure that, if needed, part of the credit facility
could be converted into capitalisation funds for institutions
such as the Centres financiers de proximité (PPPMER)
and their unions. Resources from the SME credit line
will be on-lent directly by NBR to participating banks (RDB
and possibly commercial banks after two years).
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