About 32,400 rural households are expected to benefit from a project designed to facilitate them to access financial services.

Dubbed Climate Resilient Post-harvest and Agri-business Support Project (PASP), the five year project is implemented by the Ministry of Agriculture and Animal Resources.

The project was announced last Friday in Kigali during a one day workshop on modalities of speeding up post-harvest investments financing.

Tony Nsanganira, the Minister of State for Agriculture, said the project would strengthen the capacity of Rwandan farmers in post-harvest handling, investment in postharvest infrastructure to decrease post-harvest losses, improve quality and increase output to markets with quality products.

He said, "access to finance has been a major challenge to our farmers which has always led to poor farming and post harvest practices. This culminated into enormous losses of produce. We want our farmers to shift from subsistence agriculture to commercial agriculture.”

"With this project, farmers will have access to credit facilities from financial institutions. Project beneficiaries and other value chain actors will be supported with a matching grant and guarantee facility.”

The project, worth USD 83.3m (about Rwf61bn), is intended to help alleviate poverty, increase rural income and contribute to the overall economic development of the country.

PASP’s primary target group comprises poor smallholder farmers engaged in production and primary processing in the priority value chains (maize, beans, cassava, Irish potatoes and dairy), poor farmers with some production potential and members of cooperatives who own small land plots and smallholders who supplement their income through agricultural wage work.

The targeted households are in 11 districts namely Musanze, Nyabihu, Rubavu, Kayonza, Nyagatare, Gatsibo, Ngoma, Kirehe, Kamonyi, Muhanga and Ruhango.

Accessing financial services

Business proposals, which comply with PASP eligibility requirements and approved by respective financial institutions, will get PASP grant and guarantee through the Business Development Fund (BDF).

Upon the approval of the business proposal by the financial institution and on behalf of business promoters, participating financial institutions will make requests to BDF for PASP financial facilities.

In collaboration with PASP, BDF will make disbursements of the grant and guarantee to respective client’s accounts in the respective financial institution which have financed PASP beneficiaries’ business proposals in respect of the criteria.

Janet Kanyambo, the fund manager at BDF, said banks should approve more proposals.

She said, "the only problem we have is that a few proposals are approved by financial institutions. Banks should approve more proposals to ensure we help more farmers which could transform agriculture sector,” she said.

PASP grant is matched with commercial loans to finance Post-harvest investments within the selected value chains and districts.

The grant amount goes up to 40 per cent of the total investment loan (excluding working capital) while the ceiling amount is USD 80,000 (about Rwf58m).

The project promoter pays the loan capital and interests up to 60 per cent while the remaining 40 per cent is offset by the grant.

The 40 per cent is paid when the promoter has paid the 60 per cent fully without failure. The grant is structured into three categories, namely; small, medium and large grants.

Gérard Mutimura, the programme fund manager at Banque Populaire du Rwanda (BPR), said banks should not be accused of not offering loans to farmers as unsuccessfull applications are down to poorly written proposals.

The project is co-financed by the International Fund for Agricultural Development (IFAD) and the Government of Rwanda whereas a memorandum of understanding was signed with BDF to manage funds, grant and guarantee facilities.

PASP has already transferred to BDF’s account the first installment of grant and guarantee funds equivalent to Rwf675.6m for financing business plans, of which Rwf337m is guarantee, funds while the remaining Rwf338.6m is grant funds.

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