The African Development Bank (AfDB) has approved a loan of US$30 million to support the establishment of the Rwanda Innovation Fund (RIF), which aims to promote the innovation economy in Rwanda and the East African Community (EAC).
The funding 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 and innovation ecosystem.
Rwanda is looking to unlock its fast-growing innovation economy, and expand and diversify growth in a low-carbon, climate-resilient manner. There is currently no dedicated venture capital fund in the country for supporting young entrepreneurs, and local investors struggle to service early-stage ventures.
“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 at the AfDB’s Private Sector, Industrialisation and Trade Development Department.
The fund will support and provide equity financing for SMEs, train tech-oriented entrepreneurs in business planning and management, and increase awareness and sensitisation with respect to intellectual property rights in Rwanda, the EAC and beyond.
It aims to mobilise at US$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 aims to create more than 2,000 direct jobs and over 6,000 indirect jobs over its 10-year life cycle, and will provide capacity-building to incubators and accelerators, facilitate additional angel networks, and train about 30,000 entrepreneurs across the region.