Rwanda targets to double agriculture sector lending from the current 5.2 per cent of the total share of loans from financial institutions to 10.4 per cent by 2024.
The goal is to modernise the sector, which currently accounts for nearly a third of the country’s gross domestic product (GDP).
The share of loans to agriculture has stagnant at around 5 per cent of the total loans to the economy by financial institutions even as it played I critical role in poverty reduction over the past decade.
The sector has also had important implications on r food and nutrition security.
Considering the current situation and trends, industry experts said, achieving financing targets will require redoubling efforts.
Agriculture faces several challenges, especially due to land degradation and soil erosion, high vulnerability to climate change, limited land, low levels of productivity for both crops and livestock, and weak processing capacity, according to information from the Ministry of Agriculture and Animal Resources (MINAGRI)
Joseph Gafaranga, a farmer and secretary-general of Imbaraga Farmers’ Organisation said that smallholder farmers are the most excluded from funding from financial institutions, particularly commercial banks.
He voiced concern that even the available loans are expensive, as they are generally charged at interest rates ranging from 18 to 24 per cent annually, putting farmers at risk of defaulting as they are unable to make profits.
"For instance, the savings and credit cooperatives are charging a 24 per cent interest rate per year, which is high," he said, calling for low-interest and friendly loans to farmers.
Jean Bosco Iyacu, Chief Executive Officer of Access to Finance Rwanda (AFR) said that the agriculture sector has been an important pillar for the Rwandan economy and will continue to play a prominent role in driving the country 2050 development agenda.
In order to achieve this vision, and maintain a steady growth Iyacu said there is a need for a rapid transformation of the sector into a higher value commercial venture.He indicated that agriculture finance stakeholders need to come up with innovative risk mitigation mechanisms and design new approaches to de-risk the sector."Doubling the share of agriculture lending is a high target, but it is achievable if we set extraordinary strategies, but we could be far from achieving it if we do business as usual," he said.George Odhiambo, Managing Director of KCB Bank Rwanda, said that the country is still importing raw materials such as maize and soybeans to run its agro-industry, pointing out that […]