Access to financial services for agricultural production is still very low in Rwanda despite the sector’s massive contribution to the national Growth Domestic Product (GDP).

This was disclosed yesterday by the Vice Rector of the School of Finance and Banking (SFB), Papias Musafiri, at the opening of a conference on value chain financing in the agricultural sector.

Hosted by SFB, the conference was aimed at creating awareness of value chain approach among financial institutions.

According to Musafiri, though agriculture has long been the economic base of most countries in Sub-Saharan Africa, ensuring financial access for agricultural production, to rural areas in particular, has always been difficult.

"In Rwanda for example, whereas the agricultural sector and its allied activities contribute more than 40 percent of the national GDP, it receives less than five percent of the entire credit deployed to the economy,” said Musafiri in an interview.

He explained that the key challenges facing the sector include high transaction costs for both borrowers and lenders, high risks faced by both parties, costly and asymmetric financial information about rural households, among others.

Speaking to The New Times, Prof. Reid E. Whitlock, the SFB Rector, said that the conference would help those involved in the agricultural value chain financing to be more supportive.

He emphasised the need for both financiers as well as credit seekers to understand each others’ needs to realise good results.

Presenting a paper, Dr. Charles Karemangingo, said that there is need to reduce the number of intermediaries in the sector’s value chain.

"There are many intermediaries and this leads to farmers not gaining from their sweat,” Karemangingo lamented.

The conference is expected to draw attention on how the combined efforts of all the stakeholders may contribute to the accomplishment of Rwanda’s national strategy of food security and poverty alleviation in rural areas.

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