Small-scale farmers in rural Rwanda will now find it easy to assess funding to expand their agricultural projects.
This follows the signing of a refinancing deal between Access to Finance Rwanda, Bank of Kigali, and Duterimbere IMF under which Duterimbere secured a Rwf400 million loan for on-lending to small farmers across the country.
The loan was provided by Bank of Kigali and guaranteed by Access to Finance Rwanda and is part of the Microfinance Challenge Fund. The Microfinance Challenge Fund Rwanda was established in 2014 in accordance with the financing and project agreement of €3 million entered into between the government, Access to Finance Rwanda, and the German Development Bank, KfW. It is managed by Frankfurt School of Finance and Management.
The loan will be used by Duterimbere to increase access to finance by micro and small sized agribusinesses in the rural areas of Rwanda with a specific focus on small holder farmers, according to Jonathan Nkoola, the team leader of the Microfinance Challenge Fund.
He added that the fund, established with funding from KfW, also provides technical assistance for institutional strengthening of high-potential microfinance institutions in Rwanda.
Speaking at the signing event, Dr Diane Karusisi, the Bank of Kigali chief executive officer, reiterated the commitment of the bank to transform lives of Rwandans, especially those in rural areas. She pledged to explore more ways of strengthening the partnership with AFR.
Judith Aguga Acon, the Access to Finance Rwanda technical director, said the institution embraced the ‘making markets work for the poor’ approach because it recognises that efforts to increase financial inclusion should be market-led and profitable for both the demand and supply sides.
“Access to Finance Rwanda is working toward a sustainable, diverse, and inclusive financial system that will enable the poor to contribute to, and benefit from Rwanda’s economic development,” Acon said.
The funding will help provide financial services to previously financially excluded segments, like small holder farmers and women, Charles Kayumba, the Duterimbere IMF managing director, said.
“Many financial institutions in Rwanda are reluctant to invest in the agriculture sector, particularly funding smallholder farmers, due to perceived and real risks associated with agriculture,” he said.
The loan is expected to benefit some 6,000 small holder farmers in rural Rwanda.
So far, Umutanguha Finance Company, Umwalimu SACCO, Letshego Rwanda, and Duterimbere have benefited from the fund through a combination of technical assistance and loan refinancing, according to Nkoola.
By the end of the first phase of the fund in March, 2017, it is expected to have directly benefitted 150,000 rural micro agro entrepreneurs.