The Development Bank of Rwanda (BRD) is a key actor in financing sustainable development in Rwanda. Mobilising private capital is, therefore, key to growing its lending capacity beyond its own capital and borrowing from development finance institutions (DFIs). The BRD’s sustainability-linked bonds, issued in local currency and benefitting from credit enhancement, directly support Rwanda’s national development agenda (Vision 2050).
The Development Bank of Rwanda’s sustainability‑linked bond
Abstract
The Development Bank of Rwanda (BRD) is a key actor in financing sustainable development in Rwanda. Mobilising private capital is, therefore, key to growing its lending capacity beyond its own capital and borrowing from development finance institutions (DFIs). The BRD also recognises the potential of domestic capital markets – as a source of funding diversification, but also a way to drive local development. With support from the World Bank, the BRD therefore chose to issue an SLB in local currency. The BRD’s first SLB, which raised FRW 30 billion (or USD 24.8 million), was issued in September 2023. Following its success, a second SLB, of the same size, was issued in September 2024.
The BRD’s SLBs directly support Rwanda’s national development agenda (Vision 2050). It has three key performance indicators (KPIs), relating to: 1) improving ESG practices and systems of partner financial institutions (from 0% to 75%), 2) increasing funding of women-led projects in the bank’s portfolio (from 15% to 30%), and 3) financing 13 000 affordable housing units (by 2028). The SLBs are also innovative in their structure, in that they only have a step-down. This incentivises the issuer to set meaningful targets: depending on how many targets are met, the coupon payments can decrease by up to 40 points.
To decrease the cost of borrowing, the BRD’s SLBs benefitted from credit enhancement from World Bank International Development Association (IDA) funds. These funds were used as collateral in the event of a default by the BRD, thereby reducing the risk for investors while also decreasing the cost of borrowing. This was the first time that IDA financing was used to leverage private capital. More details on the innovative structure can be found here. In addition to the credit enhancement, the World Bank also provided crucial support in the form of technical assistance, for example in preparing the SLB framework, reviewing key transaction documents, engaging with financial and legal advisors, and defining appropriate and ambitious KPIs and sustainability performance targets.
Investors have very positively received the BRD’s SLBs: the first tranche was oversubscribed by over 110%; the second issuance was oversubscribed by 130% and drew investors from far and wide. Beyond the direct impact of incentivising positive progress towards the three KPIs, the SLB – which was issued in local currency – also contributed to domestic capital market development. The credit enhancement from the World Bank was crucial to the two issuances, allowing the BRD to provide end-borrowers with a significantly lower lending rate, while also mobilising private investors. At the same time, however, it is expected that – over time and thanks to its strong balance sheet and credit rating – the BRD will be able to issue without any form of credit enhancement.
The BRD’s issuance has significance beyond Rwanda too. It was the first-ever bond issuance by the BRD, the first SLB issuance in East Africa and the first time an SLB was issued by a national development bank globally. These all contributed to having a positive demonstration effect to other issuers. The innovative use of IDA funds now has the potential to be replicated, therefore encouraging the World Bank and other multilateral development banks (MDBs) to scale such solutions.
This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD.
This can include intellectual or funding contributions.
This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
Note by the Republic of Türkiye
The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Türkiye recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Türkiye shall preserve its position concerning the “Cyprus issue”.
Note by all the European Union Member States of the OECD and the European Union
The Republic of Cyprus is recognised by all members of the United Nations with the exception of Türkiye. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
Kosovo: This designation is without prejudice to positions on status, and is in line with United Nations Security Council Resolution 1244/99 and the Advisory Opinion of the International Court of Justice on Kosovo’s declaration of independence.
Photo credits: © imagedepotpro/gettyimages.
© OECD 2025
Attribution 4.0 International (CC BY 4.0)
This work is made available under the Creative Commons Attribution 4.0 International licence. By using this work, you accept to be bound by the terms of this licence (https://creativecommons.org/licenses/by/4.0/).
Attribution – you must cite the work.
Translations – you must cite the original work, identify changes to the original and add the following text: In the event of any discrepancy between the original work and the translation, only the text of original work should be considered valid.
Adaptations – you must cite the original work and add the following text: This is an adaptation of an original work by the OECD. The opinions expressed and arguments employed in this adaptation should not be reported as representing the official views of the OECD or of its Member countries.
Third-party material – the licence does not apply to third-party material in the work. If using such material, you are responsible for obtaining permission from the third party and for any claims of infringement.
You must not use the OECD logo, visual identity or cover image without express permission or suggest the OECD endorses your use of the work.
Any dispute arising under this licence shall be settled by arbitration in accordance with the Permanent Court of Arbitration (PCA) Arbitration Rules 2012. The seat of arbitration shall be Paris (France). The number of arbitrators shall be one.
