An estimated 90 per cent of the Rwandan population is employed in the agricultural sector. With many farmers accustomed to practising subsistence agriculture, Urwego Opportunity Bank is at the heart of changing the norm to enabling Rwandan farmers practise sustainable agriculture by providing tailor-made agricultural loan products to them.
In an interview with Hope Magazine last month, Jackson Munyaneza, the Agriculture Finance Officer at Urwego said the bank has an agriculture loans department, with 15 staff, 14 of whom are highly trained agronomists.
He said five of the agronomists are based at Urwego’s head office in Muyenzi Plaza, Kigali while the others are well-placed around the country in Urwego branch offices.
“On a daily basis, they visit farmers in most locations in Rwanda by going to their cooperatives to discuss with them Urwego’s agricultural loan products and how the bank issues them.
In principle, Urwego’s agricultural lending for smallholder farmers is done in the form of group lending, according to Mr. Munyaneza.
The cooperatives under which the group of farmers are operating guarantees the group loans since the cooperatives are registered under the Rwanda Cooperative Agency (RCA) thus ensuring none defaults the loan payments.
Urwego also issues individual loans to farmers, should they meet the criteria.
“We offer them loans throughout the agriculture value chains. We finance the cultivation of crops such as maize, rice, potatoes, soya beans, beans and horticultural crops. We also lend to dairy farmers by enabling them buy cows and the milk machines from Inyange Industries, milk containers and vehicles to transport the milk,” Mr. Munyaneza explained.
He noted that Urwego intends to grow the product offering from next year to financing the cultivation of cash crops such as tea, coffee and pyrethrum.
He added that Urwego has worked with over 70 cooperatives so far, reaching out to more than 73,781 farmers in the process.
So how does it work?
“When our agronomists meet with farmers in cooperatives, they explain to them the different products,” he explained.
He said that once the farmers understood the loan products, they then approach Urwego, which has 15 branches countrywide, when an agricultural season starts and apply for loans through their cooperatives, say for the buying of seeds, fertilizers and agricultural equipment.
“We give them a form to fill to apply for the loans in which every member of a cooperative fills in their details which include name, sex, age and marital status.
Our agronomists then go and evaluate how much exactly of a particular fertiliser or seeds are needed by the farmers so that we don’t give them a loan amount over and above the required amount.”
He said after the farmers apply for the loans, the Urwego staff sum up the total land space going to be taken up by the crops of each of the farmers in the cooperative then request the suppliers to supply them with the farming requirements.
Paying back the loans
First, before issuing a loan to a cooperative, it has to provide proof of the contracts with the buyers who will purchase the harvest, said Mr. Munyaneza.
Munyaneza said paying back the loans is as easy as it sounds.
“Depending on the agreement the cooperative members have with the buyers of the produce on terms of payment, we agree with them a set time when they should pay us,” he said.
Similar to production loans, Mr. Munyaneza said Urwego bank supports post-harvest agriculture financing.
“The cooperatives can approach us for credit to harvest their crops and transport to the buyers or factories,” he said.
He noted that due to the fact that Urwego finances the entire value chain in agriculture, many farmers are now benefitting from their agricultural loan schemes and were growing from small-holder farming.
Therefore, it is very important for Urwego to provide agricultural credit products and services in order to achieve the holistic transformational impact on the rural poor as stipulated in its vision. Through its agricultural lending, farmers can access the capital they need to grow, diversify and ensure their harvest