Agriculture is by far the biggest employer in Rwanda, accounting for up to 60 per cent of the workforce. The sector is also a key contributor to the national GDP, with the central bank putting its share at 24 per cent in 2020.

Nonetheless, agriculture remains severely underfunded with most financial institutions still dragging their feet. This is despite the fact that the Government has in recent years taken bolder steps toward creating an enabling environment for lenders, including efforts at derisking the sector through creation of a national agriculture insurance scheme.

According to the National Bank of Rwanda, the sector received a paltry 5.27 per cent of the total loans disbursed last year. To say this is a drop in the ocean is an understatement.

With the sector starved of funding it is hard to see the country achieving development objectives considering agriculture is the backbone of the economy – at least from the perspective of the number of people who are directly dependent on it. Needless to say, it would be next to impossible to achieve it’s the targets spelt out the Agriculture Transformation Strategy, a six-year 2.7 trillion national blueprint launched in June 2018.

To turn things around, there is a need for financial institutions to deliberately scale up their lending to the sector. From smallholder farmers to agro-processors to other players along the value chain there is every reason to finance agriculture.

Indeed, there seems to be a consensus among key players that Rwanda’s agriculture sector is a goldmine of untapped potential.  However, lending institutions need to be flexible and creative, and develop sector-specific financing models that can unlock this potential.

On a good note, one commercial bank this week took a giant step in the right direction. Equity Bank Rwanda launched new products with the objective of increasing its financing to agriculture six-fold, to 30 per cent of its total loan portfolio in five years, up from the current 5 per cent. Through these new financial products, the lender is seeking to get closer to the sector to be able to serve it better, even accompanying individuals and cooperatives in designing bankable proposals.

While a few banks have previously developed different financial products for the sector, they have often done so half-heartedly, obviously with little impact. We hope Equity Bank Rwanda’s new agricultural products is only the beginning of a major shift in the local banks’ attitude toward agriculture. We call on other financial institutions to also prioritise agriculture and come up with reasonable products. 

To the Rwandan farmers, agroproducers and agrodealers and other players in the sector, we urge you to fully embrace these emerging opportunities with integrity so as to increase both productivity and value.

This will help address the many challenges that continue to afflict the sector, from unsustainable farming methods to poor postharvest handling practices to agro-processing to issues surrounding the supply chain. Ultimately, it will transform the sector and help the country achieve its development goals.