In Rwanda, small loans spur business expansion

Francois with his bicycle for transporting bread
With a small loan, Francois was able to buy a bicycle and expand his bakery, transporting bread to more shops and making more money for his family. Photo: Emmanuel Ntagungira/UNDP in Rwanda.

Before the sky even begins changing colors, Francois Nzamvugankize is awake and has begun his work of baking and selling bread. 

Until recently Francois, 25, struggled to provide for his wife and two young children — but now they are on the road to financial security and success.                


  • More than 90 percent of Rwandan households live in rural areas and depend on subsistence farming. About 60 percent of the population, mostly in these rural areas, lives in poverty.
  • BIFSIR aims to reduce this poverty and help achieve Millennium Development Goals by providing financial services to poor and low-income populations.
  • Jointly funded by UNCDF and UNDP, BIFSIR has a budget of US $5 million.

This drastic change is the result of Francois becoming a member of Rwanda Youth Parliament (PAJER) Village Savings and Loan Association Group.  Each group includes 15 to 30 people who save money together, and then receive small loans from the accumulated savings. 

Before joining the group, Francois would request loans from businessmen and pay them back with money earned from his bread-making. But he could not get money at a reasonable interest rate to develop his business, he says.

 “Feeding my family was difficult, because I couldn’t buy a bike for transporting my bread to the small shops, which meant I wasn’t able to sell very much,” explains Francois. 

PAJER recently entered into a partnership with and received a grant from a joint project of the United Nations Capital Development Fund (UNCDF) and UNDP aimed at building an inclusive financial sector in Rwanda. The funding will go towards PAJER’s ultimate goal of providing “linkages” between loan associations and formal financial institutions. 

Francois’s first loan from his group was only $8, and he now has a loan worth $25.  When he initially started saving with the group, he only saved $0.33. But in only four months, he has saved more than $15.

PAJER staff members provide training so he can better understand the importance of saving and ensure that his business thrives. He currently saves his money through the group, and is a prime example of a member who is quickly reaching a point where a “linkage” with a formal financial institution will be needed to further expand his business.  With this linkage, Francois would have the chance to access money necessary for his business and family to continue flourishing. 

And it only took $8 for him to achieve his success so far. 

“I got a loan from the group, and through the loan I invested in my business, and with my business’s profits I was able to buy a sewing machine for my wife, so now she can make money being a seamstress.  I can buy food and milk for my children, and clothing,” Francois said.

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