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Value chain Finance/ Rwanda – Credit institutions move to boost agriculture sector

08 November 2015

The Annual Agriculture Finance Conference held in Kigali brought together more than 200 financial experts, bankers and development partners to discuss mechanisms of increasing funding to the agriculture sector to fast track economic growth. Among the resolutions bankers tabled are formation of more partnerships with farmers, capacity building, developing more products for farmers and funding construction of storage facilities. These measures will enable farmers increase productivity, but also reduce on post harvest losses and help attract more funding to the sector. The Head of Business Development and client services, at Kenya Commercial Bank(KCB) Rwanda ltd revealed that, lending to farmers is possible and presents bankers with yet another business opportunity but bankers must understand the farmer’s needs and aspirations in order to exploit that opportunity. It was noted that, formation of partnership with farmers and helping them to establish safe harvest collection centres while linking them to potential markets, are best approaches financial institutions could utilize. This will help re-assure banks on the availability of produce and allows sustained financing of agricultural production through the most innovative ways along value chain, stated the KCB Bank’s Head of Business Development. According to financial experts attended the conference, encouraging direct payment to suppliers and farmers, while embracing quality checks along the value chain will help make the sector less risky and boost funding to the sector. According to the Senior Technical Specialist for Inclusive Rural Financial Services at the International fund for agriculture development (IFAD), the initiatives require strong collaborations between farmers and stakeholders to be able to realise positive results while being able to establish strong rural finance policies and tools that will enable farmers boost value addition along agricultural value chains. He suggested that bankers can use credit guarantees and East African warehouse receipts as a facility to boost lending to the sector. Rwanda has more than 6,648 cooperatives most of which carry out farming as their main economic activity, empowering these cooperatives while creating collective investments and sustainable rural employment opportunities is a win- win business for both farmers and banks, said the Head of Savings and Credit Co-operative development and supervision at the Rwanda Co-operative Agency. The Chief Executive Officer for Development Bank of Rwanda (BRD) acknowledge that, funds for cooperatives are still low and must be increased to make the sector more productive. The BRD bank is currently funding more than 75 projects in other banks which have pledged more support on the Business Development Fund (BDF) which has so far financed more than 11,566 agricultural projects over the past 5 years.



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