Impact enterprises in Rwanda: structuring an ecosystem for more inclusive growth

How can businesses be supported to attract financing, create jobs and better serve vulnerable populations? In Rwanda, ADA contributes to developing an ecosystem of impact enterprises that respond to social and environmental challenges in an economically viable manner, while supporting the country’s economic transformation ambitions.

In 2024, the Rwandan government adopted the second National Strategy for Transformation, which serves as the reference framework for the country’s development up to 2050. It aims to accelerate economic transformation, promote inclusive growth and improve living conditions for the entire population.

In this context, developing well-structured businesses, capable of attracting financing and scaling up, is a key driver of job creation. However, the benefits of this growth do not always reach all segments of the population. Certain vulnerable groups – particularly women, identified as a priority group within the project implemented by ADA in Rwanda – continue to have limited economic opportunities.

This is where impact enterprises represent an additional lever to steer economic trends towards greater inclusion.

These enterprises stand out for their ability to address specific social and/or environmental challenges through their internal operations, partnerships, as well as their products and services. A business model centred on impact enhances their potential to reach vulnerable groups, particularly within a robust regulatory framework.

In collaboration with local stakeholders, LuxDev and the Embassy of Luxembourg in Rwanda, ADA coordinated discussions leading to the development of a definition of impact enterprises. This definition aims to improve their recognition and facilitate their development.

Strengthening recognition to unlock economic potential

In the absence of a clear operational definition, these enterprises had a low profile in the market, which limited the extent to which their needs were taken into account in the design of public incentives and tailored financial products.

They notably face a “missing middle”, as their financing needs fall between those addressed by microfinance institutions and those addressed by commercial banks.

In addition, current risk assessment approaches tend to prioritise physical collateral. Impact enterprises, which often have limited assets to offer as collateral, are therefore perceived as higher risk, with their social missions more often viewed as a risk factor than as a source of value. This frequently results in reduced access to finance.

Recognising these entities opens the way to more tailored solutions that take into account both their economic and impact objectives. It also allows for better structuring of the support they require, particularly in terms of financial management, market access and impact measurement, thereby enhancing their attractiveness to impact investors.

Beyond financing: towards a structured impact ecosystem

This recognition also creates the conditions for public policies to take better account of the specific characteristics of these entities, notably through the development of tax incentives or preferential conditions in public procurement processes.

It further provides a foundation for structuring an ecosystem around these actors, in order to support their growth and amplify their impact.

ADA’s involvement forms part of the Kigali International Financial Centre (KIFC) project, funded by LuxDev, which aims to position Kigali as an attractive international financial hub, particularly for impact investment.

Within this framework, ADA contributes to the development of this ecosystem by supporting local businesses, strengthening business support organisations (BSOs), and working with financial institutions to develop adapted solutions. The aim is to support businesses capable of creating sustainable jobs and contributing to more inclusive growth.

“Strengthening the local ecosystem is one of the key levers for the development of impact enterprises, while offering them sustainable growth prospects.”
Sylvia Nitelet, Programme Manager