Bridging the gap: Banks meet Rwanda Agri-MSMEs to discuss inclusive financing

By Wycliffe Nyamasege
On 3 May 2024 at 11:18

Calls for inclusive financing on Thursday dominated a private sector networking event between local banks and Micro, Small, and Medium Enterprises (MSMEs) operating within the agricultural sector in Rwanda.

The event organized by the United States Agency for International Development (USAID) under the Feed the Future Initiative brought together more than 80 select MSMEs, often excluded from financing by commercial banks.

Representatives from Equity Bank and the Bank of Kigali attended the event held at the Four Points by Sheraton Hotel in Kigali, where they had an opportunity to showcase products targeted at the groups.

Representatives from Equity Bank engage local MSMEs during the networking event.

The event also offered the MSMEs an opportunity for agribusinesses to pitch their businesses and initiate Business-to-business (B2B) partnerships to expand their businesses.

The Bank of Kigali’s presentation focused on working capital facilities and how the bank can support agri-MSMEs to access working capital for daily operations.

The other products the bank showcased touched on financing for land acquisition, post-harvest activities, irrigation equipment, as well as the purchase of vehicles.

The bank also took the MSMEs through various unsecured facilities aimed at supporting their cash flow.

Alexis Bizimana, the Head of Agribusiness at the Bank of Kigali, said the bank offers different financing products for MSMEs, with interest rates ranging from 8 to 18 per cent per annum.

"We have different loan schemes for commercialization and delisting for agriculture transformation targeting production at an interest rate of 8 per cent. The second one is export growth funds, where we support surety for exporters at an interest rate of 12 per cent. We have an economic recovery fund for agri-processing available at 6 to 8 per cent. If we have customers under these categories; they are going to get concessional funding. Otherwise, if you come at a commercial rate, we give at an interest rate of 16 to 18 per cent,” explained Bizimana.

Michael Baingana, the Director of Finance and Investment at Hinga Wunguke, a USAID Feed the Future support program that enhances agriculture productivity and monetization, said there are still gaps that banks could take advantage of and develop more products targeting MSMEs in the agriculture sector.

“We thought that perhaps we could bring them [MSMEs] to the forefront because they potentially have some very good businesses in agriculture. We have people in production, processing, and other input suppliers, mostly women, people living with disabilities, and youths,” said Baingana.

“We are trying to see if the banks could unlock, in terms of understanding the potential in agriculture, and perhaps come up with new projects that could even help them make money from potentially very redundant but productive sectors."

Uwera Emma, the Founder and Managing Director of I&J company, a seed company producing maize and soybeans, was among the MSMEs who attended the event.

She lauded the networking initiative, saying it helped raise awareness about financial products targeted at entrepreneurs like her.

“There are some financial institutions and banks doing things that are very beneficial to us, but you find that we are not aware. For instance, the bank I am using can only give me RWF 5 million without collateral, but these ones go up to RWF 17 million at an interest of about 9 per cent,” stated Emma.

Jessica Spence, the Economic Growth Office Director at USAID, emphasized that access to inclusive financing is crucial to improving food security and driving the economy.

“Most assessments show that one of the biggest problems is that financial institutions do not understand the agricultural sector and have limited products that speak to the needs of actors within the agricultural sector,” stated Spence, adding, “The good news is that financial institutions are beginning to crack the nut.”