The African Development Bank Group (AfDB) has approved a loan of US $30 million to support the establishment of Rwanda Innovation Fund (RIF). The fund has been established to invest in technology-enabled Small and Medium-Sized Enterprises (SMEs) and to develop the capacity of Rwanda's entrepreneurial and innovation ecosystems.
The RIF will also promote innovation in the East African Community (EAC) region at large.
Download the Rwanda Innovation Fund appraisal report.
“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,” said Abdu Mukhtar, Director for Private Sector, Industrialization and Trade Development Department at the African Development Bank.
The Fund 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 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.
Rwanda is looking to unlock its 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.
Among such entrepreneurs in Rwanda is Henri Nyakarundi, Founder and CEO at ARED (African Renewable Energy Distributor). One of ARED's offerings is the Shiriki Hub, a mobile kiosk with solar panels, a Wi-Fi router and mobile phone charging stations. The kiosk is offered as a "franchise" targeted at low-income people looking for a way to make a living.