Posted on November, 25, 2024 at 08:37 am
The Bank of Kigali (BK) has encouraged farmers to take advantage of loans amounting to Rwf50 million meant for cooperatives as a way of implementing the BK Group’s commitment to increase agricultural financing in Rwanda.
This was announced on November 20, 2024 in Huye district during an outreach program conducted by the BK Loan and Credit department, that was aimed at sensitizing cooperatives on the “Kungahara na BK” product- a new financing facility designed to empower cooperatives in the agribusiness sector.
These forums, also be held in Rusizi district on 21st November, aim to raise awareness of this new loan facility while fostering collaboration among stakeholders to boost Rwanda’s agribusiness potential.
During these forums, BK representatives showcased products available for individual farmers, and gathered their feedback. The events also featured on-site account opening services for cooperative members who are not yet Bank of Kigali customers.
The cooperative representatives were briefed on this type of loan, where BK provides loans of up to Rwf50 million to cooperatives that grow rice, tea and maize to repay within 12 months with produce insurance as collateral.
BK officials explained that they also set up short term loans (repayable within three months) where cooperative invoices can be used to secure the loan to use to payoff members at a time when their clients have not paid up.
Cooperative officials welcomed this new information saying that it will help them especially when members need money urgently.
“Sometimes a person needs money urgently, for example to pay school fees, and instead of a child staying at home to miss out school, one can take this money, earn a little but allow the child to go to school,” one cooperative official said.
Huye cooperative members also appreciated BK services and the fact that the bank has eliminated monthly fees for account holders.
“BK provides good customer service, which is now coming closer to customers,” said Elias Uzabakiriho, who has been banking with BK for a short time, and opened an account in 2023.
Uzabakiriho said that citizens can now open BK accounts wherever they are and noted that unlike in the past, BK staff do visit their clients for feedback.
“BK comes and sees what you are doing, if it finds that you are doing well, it gives you more money, and if it finds that you are not doing well, it gives you advice,” he added.
The outreach forums come as a follow up the commitment made by the BK Group to increase access to agricultural financing.
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Agriculture remains the backbone of Rwanda’s economy, and though 70% of people live off agriculture activities, contributing to 30% of the GDP, only less than 6% of the total commercial loans in Rwanda is allocated to this sector.
BK CEO, Dr. Diane Karusisi said previously (in 2019) that with the banks formidable financial performance of coming close to hitting a ‘billion-dollar bank’ mark, this will be followed by taking the first step to create competition in agricultural financing among commercial banks, an area where many banks have hesitated to invest.
“There is no competition in financing the agricultural sector and we are taking the lead but there is a lot we are going to learn from customers to leverage our competition,” Dr. Karusisi, said then at a press conference to announce BK’s financial results.
Since then, the Bank of Kigali has played a crucial role in supporting the sector’s access to finance and its modernization by providing financing solutions to agribusiness players and innovative business enterprises.
For example, in October this year, BK entered a partnership with enterprises like Kivu Choice, BK is helping to enhance food production and affordability.
In 2019, the bank officially launched a new digital product dubbed as “IKOFI”, a revolutionary universal wallet that offers financial services with focus on Rwandan farmers, agro-dealers, Agri-businesses and other players in the agricultural ecosystem.
The product started with a focus on enabling farmers access timely agriculture micro loans to purchase agricultural requirements such as fertilizers, seeds and other needs.
As of 2021, the product had added the coffee sector to its portfolio and had reached 1,767 agro dealers and 263,691 farmers who are active IKOFI wallet users benefiting from the service by digitally paying for their agro-inputs through mobile phones.
The digital financial product also helps farmers to send and receive money free of charge (zero transaction fee), anytime, to anyone, anywhere in Rwanda using their phones and conveniently pay for other online services like Irembo, RRA, WASAC among others.
Through the BK Urumuri Initiative- an annual edition organised by the BK Foundation, in partnership with Inkomoko, the bank has also provided interest free seed loans to startup business including a majority of them in the agribusiness with an aim of empowering Rwandan entrepreneurs.
Now in its eighth edition, the BK Urumuri Initiative is set to award five top winners in the competition that has attracted 12 women-led businesses finalists competing for a slot to win the edition which has set aside Rwf25million interest free funding this year.
On top of focusing on creating different products for women-led businesses, BK has three products specifically for women where it provides unsecured facilities (unsecured stock loans, capital facilities and equipment loans), which it says will respond to the current need for inclusion and strengthening the entrepreneurial ecosystem in Rwanda by connecting vulnerable women micro-entrepreneurs.
Such initiative among others are expected to contribute to the newly announced Second National Strategy for Transformation (NST2), a 5-year strategy (2025-2029) approved in August this year.
The NST2 will target achieving specific goals in agriculture- with a 6% growth to become more market oriented and sustainable with a productivity of more than 50% driven by an 85% expansion of key agricole development infrastructure such as irrigated land, access to fertilizers and seeds, and boosting domestic animal production- many of which Rwanda has made primary strides.
Source: KTPRESS