New tech to help ensure efficiency in agric financing

A new agricultural technology app, that was rolled out this week, is expected to ease application for loans as well as facilitate efficient use of fertilisers, and seeds, actors in agriculture and livestock sector have said.
Rugemanshuro speaks during the meeting. Nadege Imbabazi
Rugemanshuro speaks during the meeting. Nadege Imbabazi

A new agricultural technology app, that was rolled out this week, is expected to ease application for loans as well as facilitate efficient use of fertilisers, and seeds, actors in agriculture and livestock sector have said.

The Smart Nkunganire System (SNS), whose cost – including its development and rollout – is estimated at $2 million, will see its pilot phase begin in January 2018, and its full implementation in July.

The Director General for Rwanda Agriculture Board (RAB), Dr. Marc Cyubahiro Bagabe, said the system brings new effective and efficient approaches through the digitisation of the seeds and fertiliser subsidy programme and will ensure improved productivity.

The technology was announced at a consultative session held by Rwanda Agriculture Board (RAB) and BK TecHouse, with key stakeholders, including government institutions, agro business owners, NGOs involved in agriculture, banks, insurance firms and telecoms.

The system came as a result of challenges that were being experienced in the inputs management and distribution, whereby the old system was resulting in huge heaps of paperwork because of lack of an efficient system and waste of seeds owing to lack of accurate data on farming activities.

“One of them was the paperwork that was involved to such extent that four years down the road, we still have unpaid bills because of the heaps of paper that we have to analyse,” said Bagabe, referring to some agro-dealers who have not yet been paid for the inputs they reportedly gave to farmers.

He said that the system will help ensure improved efficiency through planning in advance, and planting crops on time.

On average, an estimated Rwf25 billion is spent on seeds and fertilisers annually and the government provides about Rwf10 billion subsidy. Farmers cover the remaining part of the expenditure.

Three seeds namely maize, soya and wheat fall under the subsidy programme, and in total, around 5,000 tonnes of seeds are used countrywide.

Up to 33,000 tonnes of fertilisers are used every year, while the target is to use 45,000 tonnes of fertilisers for the financial year 2017/2018, according to figures from Rwanda Agriculture Board.

Bagabe said the system will help the Government to know the amount of seeds and fertilisers that will be needed by farmers, and the exact subsidies needed.

De-risking agriculture financing through data

Regis Rugemanshuro, the CEO of BK TecHouse, explains that SNS is built to be a platform that will grow over time to meet the evolving needs of the agricultural sector, continuously adding value for all stakeholders involved.

He noted that in 2016, though agriculture contributed to more than 30 per cent of the national economy and employed more than 70 per cent of the population, loans to the sector consisted of only 7.4 per cent of the total loans ( as shown by GDP National Accounts 2016 Publication, and FinScope_Rwanda_2016_Report).

According to the Monetary Policy and Financial Stability Statement released in February 2017 by the National Bank of Rwanda, mining and agriculture were the two least financed sectors in 2016 with 0.1 and 1.8 percentage share of total 1,407 billion bank loans, respectively.

Loans to agriculture declined by 4 per cent from Rwf29.8 billion in 2015 to 28.6 billion in 2016,

Theopiste Nyiramahoro, the president of Coffee Farmers Cooperatives’ Federation, told Saturday Times that banks have been dragging their feet in giving loans to farmers’ cooperatives, noting that even when the farmers get them, they are only given money which is half their guarantees.

Rugemanshuro said that the reasons why agriculture does not get the same loans as construction sector is that banks do not have accurate data about the size of land owned by farmers, and productivity of their farming activities.

“Our plan is to work with financial institutions and Telecoms to ensure that SNS remarkably contribute to facilitating access to finance for the farmers, raising financial inclusion, promoting cashless transactions, promoting green economy by reducing the amount of paper used in the agriculture sector, and turning agriculture into a more attractive investment sector for financial and insurance institutions,” he noted.

Input provision and payment

Egide Gatari, the agriculture subsidies programme manager at RAB, told Saturday Times that one of the challenges that face farmers is that sometimes, though seeds and fertilers are available, they do not have financial means to buy them, pointing out that it was in that context that they wanted financial institutions to use the system to ease farmers’ access to finance.

“The farmer will request a micro-credit, say, Rwf25,000 to buy seeds and fertilisers. But, the farmer will not be given that money in cash. They will be told to go to an agro input dealer, get the seeds and fertilisers, then the bank pays the dealer,” he explained.

He observed that the system will ensure that farmers use the money for intended farming purposes, and prevent diversion of funds.

“We want also to connect with the people or company which will be buying the farmer’s produce, such that they will be paying them through the bank the farmer used to get the credit. Then, the bank will get its due money, and give the balance to the farmer,” he said.

From November 13 to 21, SNS was piloted in five districts, 14 sectors and more than 1000 farmers have registered using their cell phones by dialing *774# and following instructions. At least 800 have been validated by the respective sector agronomists using platform.