Lack of a bank that exclusively serves the agriculture sector is affecting the productivity of the sector, MP Théogène Munyangeyo, has said, calling for a study to create one. With the agriculture sector employing more than 70 per cent of Rwanda’s working population, the sector is considered to be the backbone of the economy. However, the sector—which constitutes 30 per cent of the country’s Gross Domestic Product (GDP)—received a paltry 1.5 per cent of total loans provided by commercial banks in the 2018/2019 financial year, according to central bank data. For long, farmers have complained that the available financial products are not designed for the agriculture sector, signalling that they are being side-lined by commercial banks. “A study for the establishment of an agriculture bank is needed,” Munyangeyo, who is the Chairperson of the Parliamentary Standing Committee on Economy and Trade, said. “The bank will help farmers get timely credit to support their farming activities.” He made the proposal on Monday, November 23, as the Minister of Finance and Economic Planning, Uzziel Ndagijimana, was presenting the status of the economy and budget for the first quarter of the 2020/2021 fiscal year to the Chamber of Deputies. Farmers are pushing for an agricultural bank because, in addition to scarcity, commercial bank loans are expensive, averaging 19 per cent. In addition, the loans are serviced on a monthly basis, making them unattractive to farmers whose earnings are based on the agricultural season (about four to six months). Minister Ndagijimana said that as opposed to setting up an agriculture bank, the government is working with financial institutions to develop special products for the agriculture sector. “What is being considered for Development Bank of Rwanda (BRD) to establish a special arrangement for lending to agriculture, different from the financial products offered by commercial banks,” he said. “If that is well designed, it can help address the issue.” With more youths now joining farming, the minister said that people engaged in the agriculture sector should be continuously trained. “This is a sector that employs many Rwandans, yet, about 80 per cent of those involved in it lack skills in this profession,” he said, adding “The farm productivity that we get is 30 per cent compared to that of the developed countries.”
