Loan shy banks are now willing to extend financial services to the rural unbanked population after government pledged to guarantee the risk prone agricultural sector.

The government set up the agricultural guarantee fund to cover any productive projects in the agricultural sector that would ideally not have necessary requirements the banks would need to issue loans.

Paul van Apeldoorn, Chief Commercial Officer Banque Populaire Du Rwanda (BPR) said that the guarantee fund will facilitate the banks to loan to the agricultural sector which is perceived a risky sector to finance.

"Now that Business Development Fund is willing to secure part of loans, this will help us contribute to the development sector in a sustainable way, especially the agricultural sector,” he said.

Apeldoorn is convinced that understanding the sector well reduces the risk. He is optimistic that the fund will also benefit farmers through provision of advisory services.

Many rural based businesses are agricultural oriented and still face challenges like financial and cash flow statements which scare away banks since sustainability in such businesses is uncertain.

With 80 percent of the population financially excluded and rural based, government has stepped up efforts to help the rural poor to access financial services with the recent being SACCOs whose savings recently hit Rfw10bn.

Nonetheless, banks have been boosted with other guarantee funds to reach out to the unbanked with the recent being Bank of Kigali’s US$ 20m grant from the French cooperation. The bank’s chief operations officer Naibo Lawson said that the funds would help to provide loans for women, the youth and the senior citizens who do not have collateral to acquire loans.

But Kamaradi Immy, managing Director Dallas Investments, a rural based coffee processing and exporting company, says that efforts to help farmers especially women who are majority to put their ideas on paper are going to roll out throughout the country.

"We want to see how we help these women to put their ideas on paper so that they can use the current opportunities to access loans from banks”, she said adding that their major challenge is to have their projects on paper to convince banks.

Karamadi who was elected President of women entrepreneurs’ chamber of the Private sector federation noted that the agricultural sector has potential to flourish into an economic engine of the country if fully financed.

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