Given that over the last three years many farmers have significantly increased their production and exceeded subsistence needs, major investments in both capital and human resources are required to handle the increasing surpluses.
Therefore, supporting harmonized programs in rural microfinance and cooperative development is important to successfully making agriculture market-oriented. That is one of the main recommendations of the Country Program Evaluation (CPE) on the cooperation between the government of Rwanda and the International Fund for Agricultural Development (IFAD) during the last 10 years.
IFAD, a United Nations agency based in Rome, was established to work with poor rural people to enable them to grow and sell more food, increase their incomes and generally improve their lives.
According to the CPE, the partnership between the government of Rwanda and IFAD has made a significant contribution to reducing poverty. On IFAD’s part, contributing factors include a more participatory approach and transition to direct supervision, while on the part of the government of Rwanda, they comprise the introduction of clearly defined strategies and programs as well as a strong accountability framework.
“Rwanda has performed very well thanks to conducive policies,” said Yukiko Omura, the vice-president of IFAD.
However, the CPE points out that despite strong growth both in the general economy and in agriculture, poverty persists in the country. This dichotomy is mainly caused by inadequate rural financing systems, which means there is a lack in adequate infrastructure such as warehouses, processing facilities and marketing mechanisms that are required to make agriculture economically viable, according to the officials.
Ernest Ruzindaza, the permanent secretary at Minagri, observed that an important part of the solution lies in significantly increasing private sector investment in rural areas by setting up infrastructure to develop the agricultural value chain. “We have to really involve the private sector,” Ruzindaza said, “therefore dialogue with all concerned sectors is ongoing to tackle the issue.”
Yet to encourage private entrepreneurs to go to rural areas, the presence of financial institutions there should also be increased. According to Raphael Rurangwa, the director of planning in Minagri, that is exactly the reason behind the government’s push to strengthen the Savings and Credit Cooperatives (SACCOs) all around the country. “Since banks are not everywhere, SACCOs play a major role in reaching out to people and making financial services accessible,” he explained.
The PRICE is right
IFAD, for its part, is to contribute by developing a harmonized support framework. In this regard, the organization recently signed a loan and a grant worth US$ 39.8 million with the government to help improve the livelihoods of poor smallholder farmers and increase economic growth in partnership with private operators.
The loan and grant agreements consist of the Project for Rural Income through Exports (PRICE) and the Support Project for the Strategic Plan for the Transformation of Agriculture (PAPSTA in its French acronym).
“With its focus on enabling smallholder farmers and vulnerable groups to participate in value chains for coffee, tea, silk and horticulture, PRICE is a flagship project in terms of public-private partnership,” said IFAD vice-president Omura.
PRICE aims to promote sustainable increased returns to smallholder farmers from the coffee, tea, silk and horticulture value chains by helping them increase the quantity and improve the quality of production. The project will support 170 farmers’ cooperatives nationwide, and will push for a high share of the export price to reach the smallholder producers. More than 125,000 vulnerable households, particularly those headed by women and young people, will benefit from PRICE, Omura noted.
The current funding for PAPSTA, which works in the six districts (Bugesera, Kirehe, Gakenke, Ngororero, Nyamagabe and Nyanza), is designed to help continuing the rehabilitation of an additional 150 hectares of marshland for rice production. The project will also increase its activities in the areas of agricultural strategy formulation, soil and water conservation and marketing support structures.
However, given the high population density and small average landholdings, combined with the rapid population growth makes, it is also necessary to identify off-farming activities generating employment and income for the rural population. This is supported by IFAD through the Rural Small and Micro Enterprise Promotion Project (PPPMER in its French acronym).
Since the cooperation began in 1981, IFAD has funded 14 programs and projects in Rwanda for a total investment of US$ 189.8 million benefiting 500,000 households.