FEATURED: New Equity Bank products to help increase agric funding

Equity Bank Rwanda PLC has launched a series of new loan products targeting the agriculture sector, in a move that is likely to revolutionise agriculture financing in Rwanda. The bank is planning a six-fold increase in its agricultural funding over the next five years, to 30 per cent of its total loan portfolio. Currently, only 5 per cent of its Rwf200 billion loan portfolio goes to agriculture. The financing products unveiled in Rwamagana District on Tuesday April 20 target agribusinesses and farmers in eight value chains including rice, maize, Irish potato, tea, coffee, dairy, poultry and horticulture. Despite accounting for 30 per cent of the country’s Gross Domestic Product, agriculture receives a modest 2 per cent of commercial banks’ lending to the economy. “Today marks a very important day in the journey of Equity Bank,” Hannington Namara, the Managing Director of Equity Bank Rwanda, said, “Agriculture feeds all of us including those who live off the farm. Agriculture can be taken as a profession, as a business.” The lack of research to better understand the sector and its challenges as well as the substance nature of farming are some of the problems challenging the sector, Namara added. “The only way we can be impactful to our people is to put money in their pockets so that they can improve their standards of living, they can employ more people on the farm, they can innovate, mechanise, go places and start targeting the export markets,” he said. Farmers upbeat Emmanuel Munyaburanga, a farmer, welcomed the move, saying that commercial banks are reluctant to lend to agriculture even as the sector is the largest employer. “These financial products targeting lending to farmers are welcome because they can help more people to develop,” he said. Agnes Umurerwa, who represents a cooperative of maize growers in Rwamagana District, said; “With increased financing, we will mechanise our agriculture practices and even invest in maize processing.” The financing products at a glance The products include the commercial agriculture working capital loan known as Zamuka Muhinzi in Kinyarwanda. The loan will help agriculture commercial firms, individuals or organisations to purchase stocks, farm inputs (e.g. certified seeds, fertilizers), the sinking of boreholes, buying of hybrid livestock and enhance distribution networks and support any other agribusiness or developments. The minimum loan amount under this product is Rwf10,000, while the maximum loan is Rwf3.5 billion. The loan term is between two months and 36 months depending on the nature and cycle of the business. Another product is commercial agriculture investment loans, an asset based finance called “Igire Muhinzi”. This is a type of financing in which the asset being bought is used as part of the collateral. Under this product, the assets to be financed will be only limited to fixed assets such as land for commercial use, buildings for commercial purpose (warehouses), and farm acquisition, and Movable Assets including machinery and Equipment. Loans range from Rwf5 million to Rwf3.5 billion, while the loan term is between 12 and 60 months for movable assets, and 10 years for immovable assets. The products also include agriculture commercial trade finance facilities covering invoice discounting, contract financing and purchase order financing. The loan size under this product starts from Rwf500,000 to Rwf3.5 billion. The minimum repayment period is be one month while the maximum repayment period shall be 6 months. The agriculture financing products have been supported by UKAID through its Improving Market Systems for Agriculture in Rwanda (IMSAR) programme that aims to stimulate growth and reduce poverty in Rwanda. Namara appreciated the support provided and expressed the bank’s commitment to realise its ambition to promote financial access for smallholder farmers and agribusinesses. Anna Wilson, the Development Director at the British High Commission in Rwanda, said that the UK has a long-standing development partnership with Rwanda which includes a significant focus on supporting economic growth. “We are delighted to see companies such as Equity Bank Rwanda committing and expanding resources to the agriculture sector, which is vital for driving inclusive growth. We hope that these tailored financial products will meet the needs of farmers and agribusinesses, really adding value and supporting the wider economy,” she said.” The Director of District Development Programmes in the Eastern Province, Alexis Rugaju Berwa, said that the initiative will support the Province and the country’s efforts to achieve food security. He said it drives Rwanda’s agricultural exports by also boosting agro-processing to increase income. A farmer saying that Equity Banks agriculture value chain financing products will help them mechanise agricuture and engage in agro-processing, in Rwamagana District, Eastern province on April 20, 2021. / Courtesy Emmanuel Munyaburanga, a farmer said that Equity Banks new agriculture value chain financing products are a boost to farmers income, Rwamagana District, Eastern province on April 20, 2021. Anna Wilson, Development Director at the British High Commission in Rwanda during the launch of Equity Banks agriculture value chain financing products, in Rwamagana District, Eastern province on April 20, 2021.

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FEATURED: New Equity Bank products to help increase agric funding