I&M Bank Rwanda PLC targets to double lending to the agriculture sector in two years as it builds the capacity of agribusiness entrepreneurs to make profits from their ventures and increase their ability to repay loans, according to its Head of Business Banking, Christian Abijuru.

Abijuru made the remarks on Wednesday, January 24, at the closure of a two-day training meant to improve access to finance and profitability for agripreneurs.

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The training was organised under the partnership of I&M Bank and the USAID (Hanga Akazi). Hanga Akazi is a USAID Feed the Future project designed to facilitate growth leading to inclusive job creation and entrepreneurship in Rwanda’s agri-food system.

This training is expected to empower businesses with the knowledge to effectively engage with the bank, to understand agri-business opportunities, and challenges and, in turn, help to design a tailor-made product that suits the sector’s needs.

While the commercial banking (financing) sector has been rapidly growing, I&M Bank indicated, the agricultural sector receives about 5 percent of the total commercial lending in Rwanda, despite the latter’s contribution of about a third to the country’s gross domestic product (GDP).

The low interest in lending to the sector is attributed to the perceptions of the sector being high risk, lack of requisite appraisal skills of agricultural projects, perception of low profitability of smallholder agricultural projects, lack of risk mitigating instruments, and high costs of borrowing, which leads to higher interest rate charges for farmers, the bank pointed out.

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Abijuru said that there are many people engaged in the agriculture sector but lack the professionalism to enable financial institutions to know their output performance, adding that some do not have agriculture insurance coverage.

But he also said that overall, financial institutions lacked understanding of the agriculture sector and its financing needs, adding that I&M Bank staff were also trained in this regard by experts in agribusiness for them to better meet such needs.

He estimated that the agriculture sector accounts for between 13 and 15 percent of I&M’s current annual loan portfolio amounting to about Rwf400 billion.

"We are envisaging reaching a level where at least 30 percent of all the loans we give go to agriculture in 2026, based on the fact that agriculture provides employment, and is important to the country,” he said.

The Chief of Party of USAID Feed the Future Rwanda Hanga Akazi, Timothy Shumaker, said that skilled employees and money are important to the growth of agribusinesses, underscoring the importance of technology use and productivity.

"Our partnership as the USAID Hanga Akazi project with I&M Bank is to make sure that there is adequate finance that is appropriate to the agri sector and that is on an affordable interest rate that’s available to these businesses so that they grow, become more profitable, hire more people into the agribusiness sector, and that I&M, and the rest of the financial sector, can expand its ability to give loans to agribusiness,” he said.

Theonestina Queen Mwamikazi whose business consists of buying maize, beans, and rice from farmers and supplying it to institutions including schools, said that the training equipped her with managerial skills including having a business focus, and gave their projects appeal to financial institutions such as through effective bookkeeping and good records for them to secure finance.

She added that there are helpful financial products that she was not aware of, but got to know thanks to the training—citing stock loans whereby one can get a loan to keep their business running in case their stocks have not yet been sold out as a business is awaiting for a good price or payment.

Welcoming the bank’s projected increase in agriculture loan share

On the bank’s plan to double lending to the agriculture sector, Mwamikazi said that it means giving more capacity and business growth for people who invest in the sector, adding "I was trained on how to properly manage it [finance] and put such money to good use for profit and not have any problem with the bank, thanks to the skills we acquired.”

For instance, she estimated that she could buy between 200 and 300 tonnes of commodities per month, depending on the demand. However, she said that sometimes she has higher demands that she cannot meet because of limited finances.

Pierre-Damien Mbatezimana, Founder and Managing Director of Shekina Enterprise – a firm that processes cassava flesh leaves into dried, powdered form, and exports it to America, Canada, Belgium, and France – said that the bank’s projection to double lending share to agriculture is a very good development.

"[This is the case] because agriculture is a sector that banks are reluctant to finance, saying that it is risky, which restricts our access to the loans we need to grow our agriculture. That plan would be a boost for us to reach our objectives,” he said.

"Currently, we have the capacity to process about two tonnes of cassava leaves per day. This is small compared to farmers’ production. If we get a bigger machine, we can process about five tonnes per day,’&039; he said, adding that about Rwf300 million is required to buy such equipment.