Micro-finance institutions, through their umbrella Association of Microfinance Institution of Rwanda (AMIR), have unveiled plans to rollout agriculture loans.
Under the arrangement, farmers will be given low interest credit and repay it after harvesting and selling their crops, AMIR officials said.
Jean Desire Usabyimana, a credit director at Umwalimu SACCO, said it is important to support initiatives aimed at increasing crop production, arguing that this will reduce the food import bill.
Jean Damascene Hakuzimana, the advocacy and communication manager at AMIR, said agro-lending was in line with the core objective of the association; helping rural people get out of poverty.
He noted that co-operatives hardly help farmers to access inputs or even sell their produce through the societies that are meant to help them in these areas.
Sixty-six per cent of farmers acquire inputs from traders, while 32.6 per cent get it from co-operatives. About 71 per cent farmers sell their produce to traders and 28.7 market it through co-operatives.
According Innocent Musabyimana, the deputy director in charge of agricultural extension at the Rwanda Agricultural Board, connecting farmers with credit financial institutions is one of the main objectives of the board.
“Our objective is to improve crop production through application of inorganic and organic fertilisers and irrigation. It’s therefore, important that we support agro-lending,” Musabyimana said.
Placide Shema, an agro-lending consultant, said many of the challenges in the agro-value chain could be solved with better funding.
“It is, therefore, important that micro-finance institutions assist rural farmers boost their production capacity through agro-lending,” Shema said at a recent meeting of AMIR members in Kigali.
He noted that extending financial services to rural areas will enable farmers become bankable, which will ultimately benefit financial institutions.
“It’s a win-win situation, help the rural farmers get out of poverty through agro-lending and they will boost your business,” he told MFIs.
He, however, advised them to target farmers who deal in fast-growing crops and those with medium to big farming projects.
Commercial banks fear lending to the agriculture sector, arguing it is ‘too risky’.