Agriculture experts from across the world are discussing ways to promote rural and agriculture finance during a three-day conference that is taking place in Kigali.
The conference running under the theme “Fast tracking Replicability of Functional Models in Rural and Agriculture Finance” was organized by African Rural and Agricultural Credit Association (AFRACA).
Experts from various countries shared their experiences on best practices in rural and agriculture finance.
On the first day of the conference, participants reviewed the global state of rural and agriculture financing, discussed how policy makers and regulators are promoting agricultural finance in their respective countries, inclusive innovative agriculture finance models, among other subjects.
Officiating at the opening of the conference, Minister of agriculture, Dr. Gerardine Mukeshimana, said that the conference takes place at a moment when many parts of the world are facing serious challenges associated with climate change and when the world population is expected to hit nine billion by 2050.
“It is important to know that among these nine billion mouths to feed, the extra two billion is expected to be from Africa and as expected, majority of Africa’s population is going to be young and this means Africa needs to grasp this huge opportunity and change how it has been doing business.” Dr. Mukeshimana said.
The Rwandan government has been implementing a set of reforms to enable Rwanda to evolve from subsistence and food security agriculture towards market oriented agriculture. Efforts are concentrated on, among other things, value chain development and initiatives to attract private investment and add premium to productivity increases, support of agro-processing and value addition.
There has been considerable progress in the development of agricultural finance in Rwanda due to national programs that include campaigns to improve financial literacy and training financial institution staff and increasing the use of technology and mobile money transfers.
She said that private sector investment in agriculture can play a significant role in development.
“If well utilized, the private sector investment has the potential to drive the inclusive development of this great nation,” she said.
According to Monique Nsanzabaganwa, Vice Governor of the Central Bank of Rwanda, 89 per cent of Rwandans have access to financial services as a result of key policies such as Savings and Credit Cooperatives (SACCOs) working from grassroots.
She also mentioned other policies that are pushing access, proximity and better understanding such as the digital financial services like mobile financial services and other innovations like the agent banking which is now taking root in the insurance sector.
She said that learning from others can help.
“I believe that we have the goodwill and mechanisms but we also know that not everything is working the way we wish it is and we want to learn from the best practices. What works elsewhere, what are the parameters. We are not going to duplicate or replicate because one size doesn’t fit all but we need to learn, what works and why and how we can customize. Everyone has to learn. As regulators, we also need to learn,” she said.
Various experts called on all stakeholders in agriculture to work together to revamp the sector.
“The agricultural sector continues to play a significant role in the livelihoods and continues to be one the biggest employers of Africans. It is therefore imperative to have an efficient rural finance and agricultural system where knowledge sharing can take place, best practices identified and replicated,” said Alex Kanyankole, the Chief Executive Officer of Development Bank of Rwanda.
According to Saleh Usman Gashua, AFRACA Secretary General, when it comes to agriculture, this is the only sector where all humanity is stakeholders. “As long as you eat, you are a stakeholder”.
Across the continent, agriculture contribution to GDP is about 20 to 30 per cent, yet 60 to 70 per cent of the entire African population is involved in one form or another of agriculture.
What is disheartening is that according to the African Development Bank statistics, less than 5 per cent of those involved in farming access one form of common lending.
“We have to work very hard and see how we can reverse the trend,” he said.
Tony Nsanganira, the State Minister of agriculture, said financial institutions need to invest in agriculture since the government is willing provide incentives.
“The government has set up measures that facilitate agriculture financing to boost agriculture financing which is currently at 6 per cent. To improve access to finance, all stakeholders need to strengthen their relationships,” he said
Eric Rwigamba, director general of financial sector development in the Ministry of Finance and Economic Planning (MINECOFIN), there should be strategies that make farmers attractive to financial institutions.
Putting farmers in cooperatives is one of the ways that ease access to finance.
“There is need to establish rural finance comprehensive policy and strategy that promote agriculture and rural finance, political will to implement policies that help financial institutions to appreciate agriculture,” he said.
“Financial inclusion and capacity building are the most important things to boost rural and agriculture finance in Africa. However, lack of infrastructures is one of the challenges in reaching out to farmers,” said Molly Dingani, a participant from Zimbabwe.
Although agriculture sector contributes 33% to the national GDP, only 6 per cent of Rwanda’s total lending goes to agriculture, according to available statistics.
Statistics also indicate that Africa only contributes 10 per cent of the world agriculture produce despite having the most arable land.