Agriculture Finance for Smallholder Farmers

Establishment of Agricultural Credit Units in Financial Institutions


Since 2017, Access to Finance Rwanda has been supporting a microfinance Bank (Unguka Bank) and a microfinance institution (Umutanguha Finance Company Ltd) to develop and strengthen their institutional capacity to effectively finance agriculture through establishment of agriculture credit units that are fully decentralised for maximum service delivery, efficiency and impact. Among other interventions, AFR supported in developing agriculture lending specific strategies, tailored agriculture loan products and capacity building to key staff.

Institutional support for the establishment of Agricultural Credit Units project was designed to address existing market failures on the supply and demand sides of the agricultural finance market in Rwanda which include but not limited to:
  • Inadequate agribusiness lending skills
  • Outreach inefficiency in rural areas for appraisal and monitoring of the dispersed clients,
  • Weaknesses in existing financial products and undiversified agricultural portfolio
  • The constrained marketing budgets are not supporting effective clients’ awareness creation for agricultural financial products and services

These challenges resulted in Rwanda’s financial sector only extending 6% share of its loan portfolio to agriculture, despite its significant contribution of 33% to the country’s GDP. At the time of project inception, existing agricultural credit products were weak and inappropriate to farmers’ needs while financial service providers faced challenges with high non-performing loan rates of agricultural portfolios.

Project overview/Key highlights:

Project name Institutional support for the establishment of Agricultural Credit Unit
Implementing partners
Project period 2 years (Jan 2017-December 2019)


small holder farmers (60% women) access financial services
employees trained and engage in providing financial services to the agriculture sector;
agricultural products and/or services revised/developed and promoted to people engaged in agriculture;
0 %
of credit portfolio grows as a percentage of total loan book
0 %
below, Agriculture Portfolio at Risk (PAR)

Project achievements so far

The project resulted in both institutions growing their client bases for agricultural loan products and significantly expanding the loan portfolio devoted to agriculture. 48,728 smallholder farmers were able to access quality financial services and institutions have increased agriculture loan portfolio to about 37% of the total loan portfolio. 95 staff of both institutions were trained on Agriculture lending skills and 4 agricultural products targeting smallholder farmers were developed/refined.

Key Lessons Learnt

Access to Finance Rwanda and implementing partners have learned that agricultural finance can be profitable if the financial service providers have the knowledge and skills to work with farmers. This requires a broader set of skills than those needed to serve other clients.
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