Regional bank to fund SMEs in East Africa

By Kenneth Oduor

Nairobi, Kenya- Small and Medium Enterprises (SMEs) within the East African Community member countries have a reason to look forward to a bright future. They will be receiving funding to the tune of 30.5 million USD from the East African Development Bank.

The bank’s governing council has approved the funding as a venture capital to promote SMEs within the East African Community region.
The East African Community is made up of Kenya, Uganda, Tanzania and late entrants Rwanda and Burundi.

Uganda’s Minister for Finance, Planning and Economic Development and also the Chair of the regional bank’s governing council Dr. Ezra Suruma said the fund to be referred to as the Venture Capital Fund will exploit the private sector capital available within the region and nurture entrepreneurship.

Dr. Suruma further revealed that the East African Development Bank will invite the East African Community’s new member states Rwanda and Burundi to join it.
“The bank is doing well on the financial front and the progress in profitability seems to be moving forward and it is only wise that we invite our brothers from Burundi and Rwanda to join us”, the minister remarked.

Suruma lamented that the region’s savings have always remained far below the required investment capital and that the bank in a good position to reduce the gap.
Saying the bank’s capital base had increased, the bank is now fully ready to venture into other activities to generate its income.

“You can be sure we are venturing into real estate in the next few months”, he said.
The bank’s council chairman spoke to the press in Nairobi after attending a council meeting at the Nairobi Serena Hotel. Other notable attendees at the meeting were the bank’s director Godfrey Tumusiime, Tanzania’s deputy minister for finance Abdisalaam Khatiba and Kenyan Minister for finance Amos Kimunya.

Dr. Suruma revealed that even though there were ongoing talks to invite Rwanda and Burundi to the bank, the two countries have not made any official commitment on when they would join the bank. He however said that the bank was optimistic that the two countries will not have a problem joining since they are members of the East African Community.

The Venture Capital Fund, VCF, has been sourced from the contributions of member states. The resolutions to source the funding from member countries were arrived at during a council meeting held late last year.
He revealed that the bank is planning to create a venture capital totaling close to 45 million USD. The bank plans to do this by inviting contributions from willing organizations and partners.

“We are planning to commence the process through a study funded by the bank itself and a grant from the United States Trade Agency. The study will be carried out by a US advisory firm Structured Credit International”, he said. •