The government is in discussions with local banks to see how they can increase funding to farmers, Tony Nsanganira, the State Minister for Agriculture and Animal Resources, has said. 

Nsanganira also said there are ongoing talks on how the government can set up an agricultural bank, which farmers have been agitating for for years.

The agriculture sector employs over 80 per cent of the Rwandan population, and supporting farmers to access affordable finance would be a huge step towards agriculture modernisation and increased productivity.

Most commercial banks say it is risky to fund the agriculture sector since majority of farmers are not insured.

Only 4 per cent of the total loan portfolios from commercial banks went to the agriculture sector.

Nsanganira said negotiations between the government, commercial banks and other financial institutions are going on to find a solution to farmers’ funding woes.

"We want to ensure that more farmers access finance to be able to increase production and contribute to the country’s economic development,” he said.

The East African Exchange last week announced that it is working with Bank of Kigali, Ecobank and Banque Populaire du Rwanda to ensure that farmers organised under co-operatives get loans under EAX’s warehouse receipt system.

Alex Kanyankole, the Development Bank of Rwanda (BRD) chief executive officer, emphasised the need to fund farmers, adding that the sector is key to ensure sustainable growth.”

Dr. Livingstone Byamungu, the national co-ordinator for Linking Farmers to Markets, a lobby group, said establishing an agrobank is a matter of urgency.

"Though we want banks to scale up funding to the agriculture industry, we should also be thinking of alternative means of financing this sector, including the establishment of an agric bank,” he argued.

Agriculture is the main driver of Rwanda’s growth, and contributed 34 per cent to total GDP growth in the third quarter of 2014.

Christine Murebwayire, the chairperson of the Chamber of Agriculture and the Association of Rwanda Farmers, said such a bank would be a big relief to the high interest rates coming from commercial banks.