African Development Bank said Monday that it is supporting Rwanda with $30 million loan in the country’s establishment of Innovation Fund.
The bank said this in a statement on its website, stating that the project’s main objective is to promote innovation economy in Rwanda and the East African Community (EAC) region.
The resource, which was approved by the group’s board will be used to establish an investment vehicle focused on funding Tech-Enabled Small and Medium-Sized Enterprises (SMEs) and to develop the country’s entrepreneurial/innovation ecosystem capacity.
According to the statement, the Rwanda Innovation Fund project is of strategic national importance to the country as it seeks to unlock its fast-growing innovation economy and expand and diversify growth in a low-carbon, climate-resilient manner, in line with its Vision 2020 and its current strategy to drive private-sector-led inclusive growth.
“There is no Venture Capital Fund vehicle in the country for supporting its promising young entrepreneurs, and local investors struggle to service early stage ventures, including follow up on investments, due to limited funding capacity and liquidity issues,” it says.
Abdu Mukhtar, a director at the Bank’s Private Sector, Industrialization, and Trade Development Department said that “By extending this loan to the Government of Rwanda, the Bank wants to enable the country to develop the sector and attract private investors.
“The project will enable the Bank to play a leading role in helping Regional Member Countries develop sustainable innovation ecosystems, spur entrepreneurial growth, address funding gaps, reduce poverty, and promote socio-economic growth,” he affirmed.
The Fund, according to the statement will support and provide equity financing for SMEs, train tech-oriented entrepreneurs in business planning and management, and increase awareness and sensitization with respect to intellectual property rights in Rwanda, the East African Community and beyond. It aims to mobilize at $100 million in direct commitments from the Rwandan Government and private investors while targeting a leverage multiplier effect of up to the US $300 million in follow-on investments.
The project is expected to support more than 150 companies at various stages and invest in about 20 early growth stage opportunities. It will create more than 2,000 direct jobs and over 6,000 indirect jobs over its 10-year life cycle. It will provide capacity-building to 7-10 incubators and accelerators, facilitate 3-5 additional angel networks, and training to about 30,000 entrepreneurs across the region.
The project aligns with the Bank’s High 5 priorities and the Ten Year Strategy in leveraging innovation across sectors to promote inclusive growth, youth empowerment, and the creation of high-value jobs. It also supports the Bank’s Information Technology and Human Capital strategies with regards to skills development for competitiveness, enhancing technology’s contribution to GDP and unleashing innovation economies across Africa.