“PROMOTInG GROWTh anD DeVelOPMenT” Rwanda Development Bank Annual Report 2009 Rwanda Development Bank Annual Report 2009 2 2009 Annual Report TABLE OF CONTENTS Profile of BRD 7 Board Of Directors 8 BRD Management 9 Message From The Chairman Of The Board 10 Achievements for the year 13 Corporate Governance 14 INTRODUCTION 18 I OPERATIONS OF THE BANK 22 1.1 Activities of the Bank 22 1.1.1 Loan 22 1.1.2 Equity 23 1.1.3 Guarantee Funds 24 1.2 Portfolio of the Bank 25 1.2.1 Disbursements 27 1.2.2 Loan portfolio per class of risk 28 1.3 Organization of the Bank 30 1.3.1 Organizational structure 30 1.3.2 Human Resources 32 1.3.3 Capacity Building 32 1.4 Risk management of the Bank 34 1.4.1 Risk Management Framework and Responsibilities 34 1.4.2 Achievements of the year 34 1.5 Development Impact 36 II FINANCIAL OVERVIEW OF THE BANK 40 2.1 Financial overview 40 2.2 Report of the Independent Auditors 42 2.3 Financial Statements 45 Shareholders of the Rwandan Development Bank on December 31st 2009 49 Notes To The Financial Statements 50 2009 Annual Report 3 LIST OF tables Table 1: Indicators on the financial soundness of the banking sector on 30/09/2009 19 Table 2: Evolution of outstanding loans in RWF Million (2006 - 2009) 25 Table 3: Trend in disbursements in RWF Million (2006 - 2009)2 27 Table 4: Evolution of the portfolio per class of risk in RWF Million 28 Table 5: Distribution of staff by level of education 32 Table 6: Overview of trainings in 2009 32 4 2009 Annual Report LIST OF GRAPHS Chart 1: Approved Projects by activity 22 Chart 2: Trend of approvals by economic sectors (2006 – 2009) 23 Chart 3: BRD portfolio per term 25 Chart 4: BRD portfolio per province 26 Chart 5: BRD Exposure by kind of investment 26 Chart 6: Trend of disbursements from 2006-2009 27 Chart 7: Evolution of the Bank portfolio per class of risk 28 Chart 8: Trend of BRD portfolio 29 Chart 9: Organizational Structure of the Bank 31 2009 Annual Report 5 LIST OF ACRONYMS & ABBREVIATIONS BRD: Rwanda Development Bank DFG: German Organization financing investment in developing countries DFI: Development Finance Institutions FAGACE: African Fund for Guarantee and Economic Cooperation MFI: Microfinance Institutions SME: Small and Medium Enterprises RWF: Franc rwandais/Rwandan Francs Taux de change en Francs Rwandais/Exchange rate in Rwandan Francs : BUYING/ACHAT MEAN/MOY. SELLING/VENTE 1 Dollar Américain/US Dollar 567.81 571.24 574.66 1 Euro 813.50 818.41 823.32 Source: National Bank of Rwanda, Exchange rates as at 31/12/2009 Rwanda Development Bank Annual Report 2009 2009 Annual Report 7 PROFILE OF BRD • Development Finance Institutions created in 1967 • Capital base of RWF 7 Billion or around US$ 12.1 Million • Government of Rwanda as majority shareholder with 72.53% and the private sector and development finance institutions with 27.47% • Mandated as the “Financier” of Rwanda’s development Vision To be “the most profitable bank at the service of poverty reduction”. Mission BRD is the Government of Rwanda’s investment arm that finances the nation’s development objectives with a focus on the priority sectors of the economy Strategic Priorities • Mobilize financing to enable Rwanda’s development • Develop special financing programs for financing key export sectors • Contribute to the development of Microfinance services • Expand our product portfolio in order to respond to customer needs • Engage and support key partners and clients • Increase our effectiveness through reconfiguration and training BRD Core Values • Integrity • Transparency • Excellence • Teamwork BRD Products and Services • Direct investment through loans and equity • Loan syndication • Trade Finance • Advisory services • Leasing • Agency functions • Guarantees 8 2009 Annual Report BOARD OF DIRECTORS Mr Fabien MAJORO Mrs Jane MURUNGI Chairman of the Board Vice-Chairman Mrs Gaëtan SCAVÉE Mr André HABIMANA Mrs Hadija MURANGWA Director Director Director 2009 Annual Report 9 BRD MANAGEMENT Mr Jack Nkusi KAYONGA Managing Director Mr Innocent BULINDI Ms Christine KARANGWAYIRE Mr Emmanuel KARURANGA Director of Finance Director for Investments Director for Risk Management Mr Vedaste AVEMARIYA Mr Désiré RUMANYIKA Mr Prosper NYIRUMURINGA Director for Corporate Affairs CEO of BRD Advisory Services CEO of BRD Development Fund 10 2009 Annual Report MESSAGE FROM THE CHAIRMAN OF THE BOARD ON BEHALF of the Board of Directors, I have the The performance pleasure of presenting the Bank’s 2009 annual of the Bank in 2009 report. Despite the global financial crisis that negatively affected the overall economy, the Rwandan is spectacular. Development Bank sustained a high growth in terms I commend of operational and financial indicators. the dedication The loan portfolio increased by 38.3% from RWF 26.1 and hard work Billion in 2008 to RWF 36.1 Billion in 2009. This is of the staff that mainly due to increased investments in large projects are the driving that are meaningful to the economy. force behind the Total approvals and disbursements for the year attained spectacular levels of RWF 25.7 Billion and numbers reflected RWF 14.8 Billion respectively. Approvals increased by in our financial 147.1%, moving from RWF 10.4 Billion in 2008 to RWF statements 25.7 Billion in 2009. These approvals were distributed 2009 Annual Report 11 among the priority sectors of the Rwandan Economy as follows: tourism (26%), services and other industries (24%), agriculture and livestock (17%), exports (17%), education (10%), leasing (5%) and microfinance (1%). Disbursements also increased by 97.3% from RWF 7.5 Billion in 2008 to RWF 14.8 Billion in 2009. More importantly, the Bank has maintained its focus on socio-economic impact by creating new jobs, generating export and tax revenues and contributing to the development of the rural areas. In 2009 the Bank created 1400 jobs and injected around RWF 17 Billion as added value to the economy. In microfinance, the Bank continued its strong dedication to the development of cooperatives, associations and microfinance institutions. Over 2009, the Bank approved microfinance projects worth RWF 1.6 Billion and disbursed RWF773 Million. In addition 135 jobs were also created and the Bank indirectly impacted on the lives of 20,059 members of cooperatives and associations and 29,159 clients of microfinance institutions. Overall net income grew by 87.3% from RWF 845.8 Million in 2008 to RWF 1.58 Billion in 2009. This performance is mainly due to the effect of the gain on disposal of equity shares in Sorwathé to the tune of RWF 724 million. In a nutshell, the year 2009 has been a relatively good year for the Bank, thanks to our esteemed clients who continually show interest in BRD. Customers remain at the center in BRD and this has motivated the Bank to implement a service charter that has greatly improved service delivery and customer care. Last but not least, I would like to congratulate the dedicated and hard working team of BRD for their great performance in 2009. The results of 2009 would not have been possible without their efforts and professionalism. Looking at the past and current achievements, I am glad to note that the Bank’s ability to execute its mandate continues to enjoy the support and trust from the Government, our shareholders, our clients and development partners. It is in this regard that I would like to specially thank the Government of Rwanda, our shareholders and partners for their continued support. In addition I would like to express my appreciations to my colleagues on the Board for their invaluable advice and guidance throughout the year. The Vision 2020 can be a reality and I am confident that together we can drive forward our mission today, tomorrow and into the future. I thank you! Fabien Majoro Chairman of the Board of Directors 12 2009 Annual Report Partnership towards development 2009 Annual Report 13 HIGHLIGHTS IN 2009 Achievements for the year The year 2009 has been a record year for BRD and its staff in their contribution to the country’s development objectives. Below are the achievements made in 2009: • A 38.3 % increase in total loan portfolio from RWF 26.1 Billion in 2008 to RWF 36.1 billion in 2009 • A record approval of RWF 25.7 Billion and disbursement of RWF 14.8 Billion • An increase of 87.3% in net income from RWF 845.8 Million in 2008 to RWF 1.58 Billion in 2009 • Approval of export promotion projects to the tune of RWF 4.4 Billion, meaning 17.1% of total project approvals for the year • Establishment of BRD Advisory Services, a BRD subsidiary company that will bridge BRD gap in terms of advisory services • The Creation of BRD Development Fund, a BRD-managed Fund for SME development • The implementation of a Cassava plant and milk collection centers, both considered as strategic projects that are initiated by the Government of Rwanda • The establishment of a Trade Finance service that will allow the Bank to increase its non-interest income • The implementation of a Mobile Team Services (MTS) which is a Bank’s outreach program that informs rural citizens on BRD products and services • The introduction of a Social and Environmental Management System that enables the Bank to manage better social and environmental risks • The negotiation of a credit line of US$ 5 Million with the East African Development Bank • The development of the tourism sector through the approval of RWF 6.6 Billion for the construction of apartments and hotels of medium and high standing • Development of the education sector with the approval of RWF 2.5 Billion for the construction and extension of 12 schools • The launch of a service charter that will improve customer service and efficiency in the Bank • The restructuring of the Bank and a re-alignment of existing policies and procedures 14 2009 Annual Report CORPORATE GOVERNANCE The Rwandan Development Bank believes that good corporate governance is a key to its success.