CONSULTANCY SERVICES FOR THE ASSESSMENT OF DETERMINANTS OF LOAN PRICING BY FINANCIAL INSTITUTIONS AND THEIR IMPACT ON ACCESS TO CREDIT BY MSMEs IN RWANDA.

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Background for the assignment

Access to affordable credit is a critical driver of economic growth, financial inclusion, and private sector development. In Rwanda, financial institutions play a central role in providing loans to individuals and businesses in productive sectors. Specifically, initiatives such as guarantee scheme, leasing and agribusiness facility were implemented under the Business Development Fund^[1] (BDF) established by the Government of Rwanda to support Micro, Small and Medium Enterprises (MSMEs) access finance and advisory services.  Other ecosystem actors are supporting similar initiatives.

Despite efforts by the Government and other stakeholders to build an inclusive financial system, many MSMEs still struggle to secure appropriate funding for several reasons, including the high cost of borrowing, high collateral and documentation requirements, unsuitable financial products, risk aversion from financial institutions and lengthy procedures.

Some of the drivers of high interest rates in Rwanda are well documented. These include structural constraints such as limited aggregate savings, limited number of financial institutions leading to trigger market competition, low diversification and innovation in loan products, operational inefficiencies, and capacity gaps within financial institutions to adequately assess and price credit risk. Additional factors include regulatory and policy barriers (e.g. high mandatory reserve requirements, restrictive pricing regulations/interest rate caps), high cost of capital, inflationary pressures, limited data analytics capacity, and weak adoption of technology-driven solutions.

Building on this existing knowledge, the study will go further to examine why limited progress has been made in addressing these constraints. It will explore the incentives, coordination challenges, and market dynamics that may be slowing reform, and generate actionable recommendations to influence policy adjustments, private sector practices, and development partner interventions aimed at sustainably reducing lending rates.

It is in this context that AFR in collaboration with industry associations, namely the Rwanda Bankers Association (RBA), the Association of Microfinance Institutions (AMIR),FinTechs association, and Mobile Network Operators (MNO), seeks to onboard a consulting firm to conduct a study to understand the determinants of loan pricing by different financial institutions, especially the root causes to the perceived high interest rates and propose medium and long-term solutions to reduce the cost of borrowing for MSMEs in a sustainable manner.

Overall Objective of the Assignment

 The overall objective of this consultancy is to generate a comprehensive understanding of the cost drivers and determinants of interest rates within Rwanda’s financial sector and to propose actionable interventions that can reduce these constraints, ultimately improving the competitiveness and affordability of credit for MSMEs in Rwanda.

AFR supports the removal of systemic barriers that hinder access to financial services by low-income people, particularly the rural poor, women, youth, and MSMEs. AFR is guided by the Market System Development (MSD) approach recognizing that efforts to increase financial inclusion and financial sector development must be market-led, profitable, and sustainable.

Interested firms should confirm their intention to submit a bid by Wednesday, March 4^th, 2026, at 17h00 HRS CAT

Any requests for clarifications to the RFP may be submitted not later than Friday, March 13^th 2026, 17h00 HRS CAT.

Bidders should submit their proposals no later than Friday, March 20, 2026, 14:00 HRS CAT

Responding bidders are advised that this solicitation does not in any way obligate AFR to make a contract award or compensate the responding firms for any costs associated with the preparation and submission of their proposals. Additionally, AFR may award a contract without conducting negotiations; all proposals should be submitted initially using your most favorable terms. AFR reserves the right to award any resultant contract to other than the offeror submitting the lowest price proposal based on technical excellence, schedule superiority or client request.

All communications regarding this RFP should be addressed via email: procurement02@afr.rw

Below is the summary planned procurement schedule:

[1] Since 2025, BDF was merged with the Development Bank of Rwanda (BRD)

Cordially,
Jean Bosco Iyacu
Chief Executive Officer