The Prime Minister of Rwanda, Edouard Ngirente has revealed the government’s plan to kick off an agricultural loan facility with an initial investment of $350 million (approximately 350 billion Rwandan francs) in order to provide farmers with loans set at less than 10% interest rate. He said this while responding to members of parliament who expressed concerns that agricultural loans in that country were exceedingly high and were reducing the profitability of farmers.
The Premier was presenting the government’s action points on agriculture to a session of both chambers of parliament and added that the facility would be implemented in conjunction with the World Bank. Farmers have long decried the high-interest rate commercial banks lend to them- an average of 18% per annum. Under the forthcoming programme, Prime Minister Ngirente says farmers will borrow at single-digit rates to increase efficiency and productivity.
“This is a project we carefully planned so as to help farmers have access to low-cost interest rates because we know other constraints that affect the agriculture sector,” he said. This is a major agriculture facility we are going to have in Rwanda. This project will have a component to ease lending to agriculture. We set a target to ensure that loans to agriculture get charged a single-digit interest rate so that farmers get affordable loans under that programme.”
Agriculture makes up 33% of Rwanda’s total GDP and employs 70% of its workforce. However, it gets only 5.2% of the loans disbursed in the country. Agricultural exports generated over $543 million in 2021, representing an increase of 39% on $390 million earned in 2020, according to statistics released in February by the National Agricultural Export Development Board.
Previously, the Prime Minister had announced that the country might need to reduce its dependence on wheat as the Russia-Ukraine crisis continues. “The 64% of the wheat that we use in Rwanda, 64% of that comes from Russia, has Russia as its origin, but we import it through Tanzania. We are trying to diversify the resources,” he said.