Agricultural experts this week met in Nyarutarama, Kigali to discuss best ways of accessing finances for the agriculture sector.
The two-day workshop that concluded, yesterday, was held under the theme: “Scaling up agriculture financing in Rwanda.”
The workshop was organised by the Ministry of Finance and Economic Planning together with the Ministry of Agriculture, with support from the African Development Bank (AfDB).
It attracted participants from the private sector, banks, insurance companies, development partners, local farmers and government officials.
The discussions focussed on how Rwanda and AfDB can jointly tilt the risk context in favour of long-term and sustainable market growth in agribusiness with the officials looking to set up an “at scale” risk sharing facility to support Rwanda’s agribusiness transformation.
Opening the discussion, Tonny Nsanganira, the state minister for Agriculture, underlined the importance of the agricultural sector to Rwanda but decried how financing institutions shun the sector.
“Agriculture remains a very critical sector, we must work hard so that this particular component of financing is looked onto and tackled beyond what we have been doing. It is being underfinanced by financial institutions like banks, saying it is risky and not easy. As a country we spend up to $200 million on agricultural imports. Now you can imagine how much the continent spends yet the most arable land worldwide is in Africa. We must come up with the right products that will make banking in agriculture possible,” he said.
Farmers cited challenges they face as they look for sustainable solutions.
Isaac Mugenzi, a farmer in Kaboko Cooperative in Nyagatare District said financing is still a big challenge. He cited an example of the banks that gives them loans for the agricultural season with an interest rate of 9 per cent which he says is much putting into consideration natural factors that can affect yields.
“I hope this meeting will do something so that the interest rates are reduced,” he said.
Emmanuel Ndoli, a supply chain manager at Nyange Industries, said as processors of agricultural products, they always notice that there are still problems concerning the quality and quantity of agricultural raw materials.
He said that for the sector to be well financed, such issues need to be addressed.
“We need to invest in improving quantity and quality of raw materials. We need good agricultural practices, new varieties that are resistant, modern techniques, we need to have demo farms so that farmers can learn from skilled personnel and mechanisation. In the eastern region where we get much of our milk, in the rainy season, we get 50,000 litres and in the dry season we get only 5,000,” he said.
He also hinted on the importance of good veterinary practices, saying many farmers make losses in milk because of mastitis.
Among other solutions discussed include capacity building and putting more efforts in research and development for value addition.
Martin Fregene, a consultant in the Agriculture and Agro industries Department at the African Development Bank, said the the bank is committed to eliminate extreme poverty in Africa, eliminate hunger and malnutrition, and make Africa a net exporter of agricultural commodities.
He said Africa imports agricultural products, worth $35 billion.
In Rwanda, 70 per cent of the people are involved in agriculture.
More than 35 per cent of the GDP comes from agriculture but only 4 per cent of commercial lending goes to the sector.
Fregene said the bank wants to turn such financial problems around by setting up what they call a risk sharing facility, where by fears of commercial banks to lend to agriculture will be removed by providing guarantees.
AfDB will also provide training to banks so that they can learn to lend to the agriculture sector, he said.
AfDB is increasing total lending to agriculture from $600 million dollars per year to $2.4 billion per year for ten years.
“We shall work with countries to support investment in key commodities such as rice, maize, livestock, oil palm, and cocoa. We shall also be working with the commercial banks. We shall provide research grants to organisations like national agricultural research centres and help to identify the best technologies and extend them to farmers,” Fregene said.
Yesterday’s wrap up sessions ended with an action plan for agriculture financing.