The Farmers’ Organizations Financing Programme-Rwanda (FOFP-R) will combine $12 million in financing from IFAD with $9 million in co-financing from Bank of Kigali.

The deal, signed on the sidelines of the Africa Food Systems Forum in Kigali on Friday, September 4, is expected to strengthen about 215 farmers’ organisations, provide financing to around 172 of them and benefit more than 35,000 smallholder farmers, particularly women and young people.

The programme will target key agricultural value chains, including maize, rice, cassava, dairy and horticulture.

IFAD Vice-President Gérardine Mukeshimana said the programme reflects a broader push towards innovative approaches to agricultural financing.

“The significance of Farmers' Organizations Financing Programme-Rwanda represents a broader shift towards innovative financing solutions. Innovation goes beyond technology; it is also about finance, institutions, partnerships and entrepreneurship,” she said.

“FOFP-R is expected to reduce risk, attract additional investment and expand opportunities for rural entrepreneurs, farmers' organizations and small-scale producers.”

Agriculture employs more than 70 per cent of Rwanda’s population and contributes about 25 per cent of the country’s gross domestic product.

However, access to finance remains a major constraint for the sector, with agricultural lending accounting for only a small share of total credit.

Farmers’ organisations play a key role in aggregating production, facilitating access to inputs and markets, and connecting farmers with financial services. However, about 70 per cent of their financing needs remain unmet, according to IFAD.

The financing gap has been linked to challenges including limited collateral, inadequate financial records and low financial literacy, which can increase lenders’ perception of risk.

Bank of Kigali Chief Executive Officer Diane Karusisi said the partnership would combine financing with support aimed at strengthening farmers’ organisations.

“Farmers' organizations are the backbone of Rwanda's agricultural economy, yet they have long been underserved by traditional financing,” Karusisi stated.

“Through this partnership with IFAD, Bank of Kigali is bringing innovative, inclusive financing solutions to the people who need them most, combining capital with the technical support these organizations need to strengthen their governance and financial systems.”

How the financing will work

IFAD’s $12 million package consists of a $9 million loan, a $1.8 million grant for risk sharing and a $1.2 million technical assistance grant.

The technical assistance component will support farmers’ organisations in improving governance, financial management and digital capacity.

It will also help Bank of Kigali develop the tools and expertise required to sustainably serve farmers’ organisations.

The initiative has also benefited from a $6 million allocation to IFAD through the Business Investment Financing Track (BIFT), a financing mechanism of the Global Agriculture and Food Security Program (GAFSP).

BIFT provides multilateral development finance institutions with flexible grant and concessional financing to support financial innovations targeting smallholder farmers and early-stage micro-, small- and medium-sized agribusinesses in low-income countries.

GAFSP Head Shobha Shetty said the financing mechanism would help expand access to capital in Rwanda’s agri-food sector.

“This innovative finance solution offered by the BIFT will support more inclusive capital markets in Rwanda to help the most vulnerable working in the agri-food sector, including smallholder farmers, women, and youth, make transformative investments for their future,” Shetty noted.

The programme is financed through IFAD’s Private Sector Trust Fund and has received support from GAFSP and the Government of Canada.