How inclusive finance drives growth in agricultural value chains

In recent years, Rwanda has experienced significant growth in its agricultural sector, with a strong focus on inclusive finance initiatives aimed at empowering farmers along agricultural value chains. Agriculture has seen substantial progress in the past decade in terms of financial inclusion, with approximately 86 per cent of the population now having some form of financial access. However, a closer look reveals that there are still segments of the population, particularly in rural areas, that are excluded from these financial services. About 70 per cent of the rural population in Rwanda rely on agriculture as their primary income source, yet they only receive about 6 per cent of the available credit. This discrepancy becomes even more pronounced among vulnerable groups such as women, youth, and people with disabilities, who face even greater challenges in accessing finance. The agricultural sector itself poses challenges that make it less attractive to financial institutions, including price volatility, the impact of climate change, and high operating costs in rural areas. These barriers hinder farmers, who are crucial players in the food supply chain, from accessing the necessary financial resources to enhance their productivity and income levels. To address these issues and drive sustainable development in Rwanda's agricultural sector, Opportunity International UK's Programme Manager, Rachel English, sheds light on the initiatives and strategies being implemented to empower smallholder farmers in the country. Through partnerships with financial service providers in Rwanda, Opportunity International aims to reach at least 24,000 smallholder farmers in the region. One of the key focuses is providing farmers with a range of financial products and training to improve their agricultural businesses. These initiatives include offering agricultural loans tailored to crop cycles, leveraging digital financial services, introducing climate-smart loans to combat volatile weather patterns, and emphasizing the importance of savings to stabilize income and consumption patterns. Beyond traditional financial services, the project also integrates technological solutions and digital tools to enhance financial inclusion for Rwandan farmers. By utilizing platforms such as mobile money apps, WhatsApp for training purposes, and digitizing financial records of farmer groups, the project aims to streamline processes, increase transparency, and ultimately boost efficiency in the agriculture value chains. In measuring the success and long-term impact of the project, the focus extends beyond the number of farmers reached. The goal is to strengthen both the supply and demand for financial services in southern and western provinces of Rwanda, with a ripple effect that can expand nationwide. On the supply side, the project aims to enhance products and services for rural clients, build the capacity of banks to serve rural clients effectively, and reduce barriers associated with serving farmers in remote areas. On the demand side, the objective is to empower farmers to access savings and credit, thereby increasing their productivity and resilience in the long run. Local farmer support agents play a critical role in providing training within their communities and ensuring sustainability beyond the project's lifespan. By leaving behind training materials, videos, and a knowledge-sharing framework, the project strives to create lasting impact and foster self-sufficiency within the communities. Looking ahead, the project not only contributes to food security but also aligns with the government's vision of a market-driven, technologically advanced, and efficient agriculture sector. By increasing access to finance, knowledge dissemination, and productivity levels, the project aims to benefit not only smallholder farmers but also other value chain actors, including MSMEs and agribusinesses. The overarching goal is to strengthen the efficiency of the agricultural value chains and drive economic growth in the sector.