BGK's pioneering credit will support Rwanda's development

Polish Development Bank (BGK) has provided direct financing to the Rwandan National Treasury for the purchase of a Polish milk cooling system. Buyer’s credit with a policy from the Export Credit Insurance Corporation, reaches €23 million. It is the first such financing provided by any bank in Poland.

Bank Gospodarstwa Krajowego provided direct financing to the Rwandan National Treasury in the structure of the buyer's credit. The long-term credit of up to 23 million euros (about PLN 88 million) is for the purchase of a milk cooling system from a Polish producer. The value of the order significantly exceeds the annual value of Polish exports to Rwanda to date, which has fluctuated around several million euros.

"The buyer’s credit structure, which is the government of another country, is the pioneering financing in the Polish banking sector. It will increase the annual value of Polish exports to this market from several to tens of millions of euros. Rwanda is seen as one of the most friendly countries for doing business in Africa. Greater interest in this market by Polish exporters has been observed for quite some time. This mainly concerns industries related to agriculture, mining and services. I am glad that BGK supports Polish entrepreneurs with international ambitions, blazing new trails in domestic banking and at the same time responding to the development needs of poorer countries" - Marek Tomczuk, member of BGK's management board, points out.

Support for Rwandan economy

The contract for the purchase of a Polish milk cooling system is of strategic importance to Rwanda's socio-economic development. The delivery of nearly 400 installations to local milk collection centers is expected to reduce milk losses due to improper storage, and increase production capacity and access to dairy products.

"The agreement we signed is a testament to the rapidly growing bilateral cooperation between Rwanda and Poland. Both sides are exploring further opportunities for economic cooperation" - says Dr. Uzziel Ndagijimana, Rwanda's Minister of Finance and Economic Planning.

Greater presence of the Polish company in Africa

The Polish exporter and beneficiary of the credit funds is Faspol, a Lodz-based company. It is a medium-sized company that designs and manufactures specialized tanks for the food and chemical industries, among others. The Polish manufacturer concluded the contract financed by BGK’s credit with Rwanda Agriculture and Animal Resources Development Board. Rwanda is not the first export market of Faspol. The Lodz-based company has been operating in Africa since 2016. To date, it has supplied products and services to customers in Kenya, Tanzania, Ghana and Senegal. Its largest contract in Africa was the delivery of 350 milk cooling plants in Kenya under a loan agreement between Polish and Kenyan governments.

"It's been an intense two years of visits to Rwanda, preparing concepts and projects, and difficult negotiations. That's why we are happy that Rwanda will be the next market where our solutions will contribute to increasing the level of food safety. Thanks to our installations, daily milk production will increase by almost 2 million liters. This means that this raw material will become more accessible to Rwandans," Marcin Kaleta, co-owner of Faspol, notes.

Exports secured by a policy

In the transaction, the debtor is a public entity - Rwanda's Ministry of Finance and Economic Planning, and this significantly reduces the risk of default. However, BGK’s credit is additionally secured by a policy from the Export Credit Insurance Corporation (KUKE) against political risk. Insurance guaranteed by the Polish National Treasury is commonly used to finance exports and investments to developing countries. The Export Credit Insurance Corporation's instruments protect against the effects of trade risks, political risks or the effects of the so-called "force majeure" - such as war or natural disasters that can prevent payments from being made.

"Although Rwanda is among the least developed countries, it is at the same time seen as a market with relatively low investment risk and good business prospects. So far, it has avoided the troubles of many other African countries that have teetered on the brink of insolvency as a result of over-indebtedness, pandemics, the consequences of the war in Ukraine and global interest rate hikes. Backed by BGK and the Export Credit Insurance Corporation, the Polish producer's transaction will serve to modernize agricultural production in Rwanda and develop local communities. We are working on further investment projects that, by stimulating our exports, will also contribute to raising the standard of living of the country's population" - Janusz Władyczak, the president of the Export Credit Insurance Corporation, emphasizes.

Since 2009, BGK has supported more than 120 export transactions in 19 African countries. Most in the markets of Egypt, Kenya, Angola, Mali and Tanzania. The contracts were carried out by Polish entrepreneurs in the food, medical, furniture, manufacturing, agricultural, hi-tech and transportation industries.