The Development Bank of Rwanda (BRD) provides long-term financial services to support Rwanda's development. Since 1967, BRD has driven sustainable economic transformation and prosperity in Rwanda. Its mission is to finance projects that align with Rwanda’s 2050 vision, socio-economic goals, and global Sustainable Development Goals by offering affordable, long-term, and customized development finance.

We spoke to Fernand Kamanzi, Head of Strategy, Research, M&E, and Resource Mobilization at BRD about their work to help achieve the Sustainable Development Goals (SDGs) in Rwanda, how they engage in blended finance, how they measure impact, their gender strategy, and much more.

Tell us about BRD’s mandate and how your strategy encourages capital mobilization to the SDGs.
BRD plays a crucial role in the economic development of Rwanda, with a mandate focused on financing projects that contribute to sustainable development.

The Bank focuses on sectors that are underfunded by traditional financial institutions, such as social infrastructure, agriculture, affordable housing, renewable energy, education, digital economy, green finance, and export. To effectively link its strategy with capital mobilization toward achieving the SDGs, BRD has adopted several innovative approaches:

• Sustainability-Linked Bonds (SLBs): Unlike traditional bonds where proceeds are earmarked for specific projects, SLBs incentivize borrowers by linking interest rates to their performance against predefined sustainability targets. This mechanism encourages BRD to enhance its environmental, social, and governance (ESG) compliance while simultaneously attracting investors interested in sustainable finance.

• Focus on Key Performance Indicators (KPIs): KPIs include, increasing the percentage of participating financial institutions (PFIs) demonstrating robust Environmental and Social Management System (ESMS) implementation to 75% in 2028 from 0% in July 2023, increasing the number of loans to women-led SMEs among total SME loans to 30% in 2028 from 15.4% in 2022, and increasing the cumulative number of affordable housing loans extended or refinanced by PFIs to 13,000 in 2028, from 544 in 2022. By setting measurable targets, BRD not only demonstrates its commitment to sustainable development but also provides transparency and accountability to investors.

• Innovative Credit Enhancement Mechanism: Collaboration with the World Bank through credit enhancement mechanisms allows BRD to reduce risks associated with bond issuance. By leveraging International Development Association (IDA) funds as collateral, BRD can lower borrowing costs and attract a broader range of investors.

• Contribution to Capital Market Development: The successful issuance of SLBs not only benefits BRD but also contributes significantly to Rwanda's capital market development. We contributed towards deepening the capital markets by putting out a new asset class on the market and having a 100% retail allocation policy.

BRD is among the innovative local development banks in Africa and over the past 12-18 months you’ve issued 2 sustainability-linked bonds (SLB) supported by the World Bank’s IDA private sector window. What was the motivation for structuring these issuances, and what gap were you aiming to fill in the market?
One of the primary motivations for issuing SLBs is to align financial instruments with the SDGs. By structuring these bonds, BRD aims to attract investments that contribute directly to sustainable development in Rwanda, particularly in infrastructure and social projects.

The issuance of SLBs also provides BRD with an innovative financing mechanism that allows access to capital from investors who are increasingly prioritizing ESG criteria in their investment decisions. This trend reflects a broader shift in the global financial landscape where investors are looking for opportunities that not only yield financial returns but also generate positive social and environmental impacts.

The backing of the World Bank’s IDA private sector window adds credibility and reduces perceived risks associated with investing in emerging markets like Rwanda. This support enables BRD to offer more favorable terms on its bonds, making them attractive to a wider range of investors.

By issuing SLBs, BRD also aims to fill the gap between financing needed for sustainable projects and the available funding sources by mobilizing private sector investments into projects that may otherwise struggle to secure funding due to perceived risks or lack of investor interest.

Tell us how the SLBs are blended and how this approach to risk mitigation translated into an increase in investor comfort and interest?
The blending mechanism in these SLBs involves combining concessional finance from the IDA with market-based financing. This approach allows BRD to offer more favorable terms to investors, thereby enhancing the attractiveness of the bonds. The IDA provides guarantees/first-loss cover, which mitigates risks associated with lending to projects that may not have sufficient creditworthiness on their own. By reducing perceived risk, this mechanism encourages more investors to participate in financing sustainable projects.

BRD has another ongoing SME-financing partnership with Rwanda Green Fund via Ireme Invest. What was the motivation for this partnership and what has been the outcome, so far?
The partnership between BRD and the Rwanda Green Fund (RGF) through Ireme Invest is primarily motivated by the need to enhance access to finance for SMEs in Rwanda, particularly those engaged in environmentally sustainable practices. By collaborating with the RGF, which focuses on promoting green investments and sustainable development, we align financial support with environmentally sustainable goals.

The Ireme Invest facility has two components: a Credit Facility to provide financing for eligible projects, managed by BRD, and a Project Preparation Facility (PPF) to support project preparation, managed by RGF. Furthermore, BRD provides subsidized loans from the credit facility and RGF provides grants and equity from the project preparation facility.

As of February 2025, several positive outcomes have emerged from this partnership.

The funding provided through this partnership has enabled numerous SMEs to invest in projects that contribute positively to environmental sustainability including renewable energy projects, waste management solutions, and other initiatives aimed at reducing carbon footprints.

In addition to financial support, we have emphasized capacity building among SMEs. Training programs and workshops have been organized to educate business owners about sustainable practices, financial management, and how to effectively utilize funding for maximum impact.

The partnership has also contributed to overall economic growth in Rwanda by fostering innovation within the SME sector. As these businesses grow and thrive, they create jobs and stimulate local economies.

How does BRD measure the impact of its blended finance investments?
Alignment with Strategic Objectives
KPIs
To quantify the impact of its investments, BRD establishes specific KPIs that reflect both financial performance and social outcomes. These KPIs may include metrics related to job creation, access to finance for underserved populations (such as women-led businesses), and improvements in housing affordability. By tracking these indicators over time, BRD can assess the effectiveness of its blended finance initiatives.

Third-Party Evaluations
BRD often collaborates with independent evaluators to conduct assessments of its projects. These evaluations provide an objective analysis of project outcomes against predefined benchmarks. This process helps ensure transparency and accountability in measuring impact while also providing insights for future investment strategies.

Reporting Frameworks
The Bank adheres to established reporting frameworks such as those set by the International Capital Market Association (ICMA) for SLBs. This involves regular disclosures on how funds are utilized and the resulting impacts on targeted sectors. Such reporting not only enhances credibility but also allows stakeholders to understand the tangible benefits derived from BRD’s investments.

Stakeholder Engagement
Engaging with stakeholders—including beneficiaries, local communities, and investors—is crucial for understanding the broader impact of BRD’s investments. Feedback from these groups helps refine measurement approaches and ensures that projects remain responsive to community needs.

Monitoring and Evaluation
BRD has a department responsible for monitoring and evaluation (M&E) as well as dedicated M&E officers. The Bank also has an institutional balanced scorecard that measures its impact at an institutional level. Additionally, this year BRD has implemented an impact scoring model to accurately predict the impact of the Bank’s investments.

How does BRD apply a gender lens to its blended finance initiatives?
The Bank collaborates with the European Investment Bank (EIB) to define strategic objectives and key performance indicators that mainstream gender equality considerations in its lending and advisory activities. This collaboration aims to enhance women’s economic empowerment in Rwanda by ensuring that financial products and services are designed with a gender-sensitive approach.

Through its partnership with EIB, BRD develops targeted advisory services specifically designed for women entrepreneurs in micro, small, and medium-sized enterprises (MSMEs). These services aim to provide guidance on accessing finance as well as business development strategies that consider the unique challenges faced by women in the entrepreneurial landscape.

Next, the Bank works with local banks and microfinance institutions to design, establish, and promote gender-intelligent financial products and services through African Women Rising Initiative (AWRI). These products are tailored specifically to meet the needs of women entrepreneurs, thereby increasing their access to finance. The initiative focuses on creating an environment where women-led enterprises can thrive through better financial solutions.

BRD also implements capacity-building programs aimed at empowering women entrepreneurs. This includes providing mentoring services that help women navigate the challenges of starting and running businesses. By equipping women with the necessary skills and knowledge, BRD ensures that they can effectively utilize financial resources available to them.

BRD is committed to championing gender equality within its operational framework. The Bank actively implements policies that support women’s access to finance, ensuring that gender equity is a core component of its blended finance initiatives. BRD’s new strategy (2024-2028) aims to increase financed Women-led SMEs by 30% share of the Bank’s portfolio by the end of 2028.

Based on your experience in blended finance to date, what gaps do you see in the market that need to be filled?
One of the primary gaps in the blended finance market in Rwanda is the limited access to capital for SMEs. Despite their critical role in economic development and job creation, SMEs often struggle to secure financing due to perceived risks by traditional financial institutions. Blended finance can play a pivotal role here by combining concessional funding with commercial investments, thereby reducing risk and attracting more private sector investment into this segment.

There is also a lack of diverse financial instruments that are specifically designed to meet the unique needs of development projects in Rwanda. Current offerings may not adequately address the requirements of sectors such as agriculture, renewable energy, and infrastructure. Developing innovative blended finance products that align with local priorities could help bridge this gap, enabling more effective mobilization of resources towards the SDGs.

Another significant gap is the need for capacity building and technical assistance for both investors and project developers. Many potential beneficiaries of blended finance lack the necessary skills or knowledge to effectively design, implement, and manage projects that attract blended finance solutions. Providing training and support can enhance project viability and improve outcomes, making it easier for investors to engage with local initiatives.

The regulatory environment in Rwanda is supportive when it comes to blended finance, however, it can be improved. There is a need for clearer policies that support blended finance mechanisms, including tax incentives or guarantees that encourage private sector participation. Strengthening these frameworks would facilitate greater investment flows into priority sectors while ensuring alignment with national development strategies.

Lastly, there is a significant gap in data availability regarding the impact of blended finance investments. Investors require robust data to assess risks and returns accurately; however, many projects lack comprehensive monitoring and evaluation frameworks. Improving data collection methods will enhance transparency, allowing stakeholders to make informed decisions based on evidence of impact.

How do you see BRD’s blended finance activities evolving in the future?
As global awareness around ESG issues continues to rise, BRD is expected to deepen its commitment to sustainability. The Bank’s current strategy emphasizes mainstreaming ESG practices within financial institutions and increasing financing for women-led businesses and affordable housing. This focus will likely lead to more SLB issuances and other financial instruments that prioritize sustainability metrics. By aligning its financing activities with international standards such as those set by the CMA, BRD can enhance its credibility and attract more investors interested in sustainable finance.

BRD’s successful inaugural SLB issuance demonstrates the potential for domestic capital markets in Rwanda. The Bank is likely to continue leveraging these markets to raise funds while reducing reliance on international credit lines. As local investor interest grows, evidenced by the oversubscription of both SLBs, BRD may implement targeted campaigns to engage retail investors further. This could include educational initiatives about blended finance products, thereby fostering a more robust investment culture within Rwanda.

The partnership between BRD and the World Bank has been instrumental in enhancing the former’s capacity for blended finance initiatives. Future collaborations with international financial institutions will be crucial for accessing additional resources and expertise. Such partnerships can facilitate knowledge transfer regarding best practices in blended finance, enabling BRD to innovate further in structuring financial products that meet both local needs and global standards.

Given the evolving landscape of sustainable finance, BRD is likely to explore new financial instruments beyond SLBs that can attract diverse investor bases. These could include green bonds or social impact bonds tailored specifically for Rwandan priorities such as climate resilience or social equity projects. By diversifying its product offerings, BRD can appeal to a broader range of investors who are increasingly looking for impactful investment opportunities.

To effectively implement blended finance strategies, BRD must invest in capacity building within its team and among partner financial institutions. This includes training on structuring complex financial products, understanding risk management in blended finance contexts, and measuring impact against sustainability goals. Additionally, sharing knowledge with other regional development banks could foster collaboration and innovation across East Africa.