The Development Bank of Rwanda (BRD) and the Ministry of Agriculture and Animal Resources (MINAGRI) have done quite a lot in helping cassava farmers, but they need to put more efforts in supporting loan coverage after crops were ravaged by Cassava Brown Streak Disease (Kabore) in 2014.

Members of parliamentary Standing Committee on Economy and Trade made the recommendations to MINAGRI and BRD officials, on Thursday, at Parliament where they were appearing to avail a solution to the farmers’ loan interest waiver request.

The total loan to the 27 farmers of whom 22 are from Ruhango and the rest from Kamonyi, Nyanza and Gisagara districts, was Rwf634 million, but it has so far grown to Rwf765 million as interest rate has accrued over time according to BRD. 

The loan was offered to farmers in 2012/13 season. The loan on cassava was to be paid after one year when they harvest their crop, at 15 per cent interest rate.

The farmers should have paid the loan in April 2014, but only one farmer paid it. BRD gave them until December 2014, but still they could not.

Farmers shun new contract

In August, last year, BRD offered a loan restructure contract that consists of paying over a five-year period from the time of signing the contract.

The bank did not put the farmers in the third category of those who are blacklisted because they did not want to pay.

But Marie-Claire Irere, the head of disbursement unit at BRD, said only one farmer has signed the contract.

When the committee chairperson, MP Adolphe Bazatoha, sought to know why farmers are not willing to sign the new contract with BRD, Irere said the farmers want all the interest be waived.

On February 16, 2015, the farmers wrote to the Prime Minister’s office and followed the letter with a petition to Parliament on December 20, 2015, seeking intervention on the matter.

Speaking to Saturday Times, the farmers said they requested that the loan be waived or that the bank allows them acquire more loans for investment so that their financial predicament can be lessened to enable them repay.

Another proposal they made was to waive all the interest rate so that they pay only the loan amount.

The farmers were encouraged to grow cassava in large quantities as they had a ready market – the $10 million Kinazi Cassava Processing Plant (KCP). They would sell a kilogramme at Rwf50.

However, Irere noted that BRD does not offer grants, rather gives loans that have to be repaid, a point that she concurred with the MPs as the bank runs a pecuniary business.

"We have waived overdue loan payment interests, but we cannot waive the normal interest. The money that the bank gave to farmers was from other banks though it was gotten at a relatively low interest,” she said.

"What we have been doing is to facilitate farmers with flexible means to service the loan.”

Monitoring cassava crop

MP Henriette Sebera, a memeber of the committee, urged BRD to concede ‘something’ if it wants to motivate farmers to grow cassava for development and for the Kinazi Cassava Plant to get produce, instead of insisting on maintaining the loan interest.

The Kinazi Cassava Plant has been operating at less than 30 per cent of its capacity as it has been receiving only 30 tonnes, yet it can process 120 tonnes of cassava per day.

In February 2015, MINAGRI started distributing more than seven million new cassava variety cuttings, known as Namuronge Selection 14 (NASE14), from Uganda’s National Agriculture Research Organisation (NARO), to farmers in 12 districts across the country for multiplication purposes.

Minister Gerardine Mukeshimana said the variety was multiplied on some 630 hectares in the country and 15 among the farmers who got BRD loans, for multiplication on three to seven hectare, each.

Through the Rural Investment Facility 2 (RIF2), a $10-million loan from the World Bank to finance agriculture, the farmers would get 25 per cent of the loan reimbursed by the government, if they pay well their loan.

Banks and micro-finance institutions lending to farmers could access this money from the National Bank of Rwanda (BNR).

Mukeshimana said the five-year RIF project ended about three months ago, but the farmers’ RIF shares were kept so that they can get them.

MPs, MINAGRI and BRD reached an understanding to reach out to farmers to explain the benefits in the new contract with BRD including the 25 per cent RIF support in loan repayment once they sign the contract.

"In September, when agriculture (2016/2017) Season A will be starting, we will reach out to farmers. The bank agrees to waive the penalty interests, and has given them another loan payment and MINAGRI agrees to help them through its technical entities so that they are able to grow cassava and get revenues in five years to repay the loan, I think that the solution will come from that path,” MP Bazatoha said.

The lawmakers called for measures to test seeds in research centers to ensure seed safety and following up farmers and the crop for guaranteed productivity. 

They also noted that there is need for agriculture insurance and sensitising farmers to embrace the insurance scheme to prepare for impending disasters such as diseases and drought.

Minister Mukeshimana said the Agriculture Insurance Bill, that is waiting consideration by Parliament, would further boost the farmers needs.

She said MINAGRI made advocacy for the Value Added Tax on agriculture insurance products to get waived for the insurance premiums to be affordable to farmers.

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BACKGROUND TO THE ISSUE

During the 2012/13 farming seasion, Development Bank of Rwanda offered loan to 27 cassava farmers from Ruhango, Kamonyi, Nyanza and Gisagara districts amounting to Rwf634 million. The loan was to be repaid after one year when they harvest their crop, which mainly was assumed would get ready market at the new Kinazi Cassava Processing Plant. BRD gave the loan at 15 per cent interest rate.

But unforeseeable disaster struck in the form of cassava brown streak that ravaged crops leaving farmers counting the cost. They were, thus, unable to pay the loan and over the years, BRD computations show the loan has grown to Rwf765 million as interest rate has accrued over time as only one farmer could meet his end of the bargain. The farmers have since been pestering BRD to write off the interest and also give them fresh loans.

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