Kigali: Agriculture experts say that in Rwanda there should be a fair way to support the agriculture sector with some proposing the possible establishment of an agriculture bank so that this sector produces the desired output in order to solve the problem of food shortages and low production in the market .
By Ange de la Victoire Dusabemungu
Some of the obstacles identified by experts during an interactive discussion on RBA include banks’ reluctance to lend to farmers, high interest rates and the lack of a stable policy for lending to farmers.
Eng. NSENGIYUMVA François, the Managing Director of KILIMO GENERAL BUSINESS LTD says that when it comes to loans given by banks to farmers, they have difficulty paying because the banks do not give enough time for the produce to be available and delivered to the market.
He said, “Talking about the produce, in three months even if you had harvested it, you would not have processed it. Even if you had processed it, you would not have delivered it to the market, these are all things that people should hear.”
He went on to explain that banks are required to build capacity in collaboration with the National Bank to solve the problem of access to loans among the farmers, both big and smallholder farmers.
Eng. Nsengiyumva said “These banks are also sometimes unfair.”
“You find that a bank is giving you Rwf 50 million and makes a provision for another 50 million as if it has released 100 million.” He added.
Eng. Nsengiyumva believes that there should be a policy and implementation process related to agricultural credit.
He finds that until now in agriculture, the bank lends to those who have financial means.
“You know the part of agriculture we are in, looking at the GDP of the country, agriculture is 25%, but if you look at those who are employed in the whole country, agriculture is 67%, almost 70%, and less than 5% of the credits issued throughout the country is for agriculture.”
Only to those who are able, or they have other positions that are known by regular banks that work with them, and they have the ability to provide the guarantees I was talking about, without the need for the bank to make a 100% provision for them.” Eng. Nsengiyumva explained.
The same observation are shared by Dr. Sina Gerard of Entreprise Urwibutso Nyirangarama.
Dr. Sina says that during his time in agriculture, he has seen banks lending to those who have resources.
He said, “When they are going to give a loan and start considering the housing grant and go to other properties, then the loan depends on those who have the resources.”
He adds, “So far I don’t see the bank very well in agriculture.”
Dr. Sina said, “As I have just done research on viticulture, the bank will not guarantee you five years to give you the money to start and pay it back.”
“We are cultivating macadamia, the Bank will not give you a five-year loan and wait for another five years to pay back.” He observed.
Dr. Sina Gerard says that “ it is still a challenge, because today people they know that the farmers are poor and in the world other farmers are powerful people, but then of course you don’t get power if the banks are not willing to get along with farmers,”
Dr. Sina proposes that there should be a Bank of Agriculture where you show the project and give you money without having to go through the process that discourages the farmer.
Dr. Celestin Ukozehasi, Deputy Dean to the School of Agriculture and Food Sciences at the University of Rwanda explains that in developed countries in agriculture there are special programs for the development of agriculture and livestock, some of which they look more closely at the idea than the guarantee.
He said, “I think we have that idea to say that it should be easier for farmers and breeders to get credit, so what is left is to learn, what is the way to simplify that thing to make it possible.”
“You hear that our colleagues in the agriculture and livestock sector are saying that the guarantee is a problem. That is to say, in the programs for the development of agriculture and livestock, it is considered how to create a fund to help a person who has a viable project, with medium capacity, and how to support him/her. But I feel that something would be very necessary.” Dr. Ukozehasi said.
On the other hand, Eng. Nsengiyumva Francois observed that the Bank of Agriculture is not something that is urgently needed.
He said, “I don’t understand because all banks, as I said, are also commercial and banking institutions.”
They have also seen that they can continue to achieve their goal of having profits working with farmers and breeders, but as a business entity, their concerns must also be resolved.” He explained.
, “They cannot give a loan to someone without any collateral or the government does not show how to guarantee a farmer, because if he goes bankrupt there is no way for the bank to return the money, which would also cause a problem.” Eng. Francois added.
For Nurah Kamashaza, one of the women working in agriculture, it is appropriate for the banks to give enough time for the loans to be paid properly.
“We, as my colleague said, we plant on time, we plant and harvest and store the produce, we have time to sell.”
“If it happens in those 24 months it would be easier for us, in fact if they give us a long-term credit we can all accept. They should say because we have been working with them for a while and maybe you will pay in three installments. “Perhaps in one year you can see some paying back, but nowadays they say if you take Rwf 50 million, after one year you take it all and bring it back with interests which is very challenging to farmers.”
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