Rwanda Impact Area:
Are you inspired to explore innovative ways of initiating and supporting micro, small and medium enterprises (MSMEs) in agriculture and scaling their impact on Rwanda’s food systems? Do you have a talent for technology or a desire to go digital? Are you an entrepreneur of your own agribusiness start-up? Or are you employed at a bank or invested in agriculture? Then read on! The African Food Fellowship is looking for creative ways to stimulate the mid-stream sector of agri-business that will contribute to a fair and competitive agricultural sector in Rwanda.
01. What is the current state of entrepreneurship in agriculture?
The absence of a strong agri-business private sector in Rwanda is considered a major bottleneck in its food systems. Agriculture provides a livelihood to more than 60% of Rwanda’s population and about 30% of the country’s GDP. Nevertheless, the National Bank of Rwanda reports that only 6% of commercial lending goes to agriculture: a sure sign that there is not enough entrepreneurship looking for loans. Several factors hinder a flourishing private sector, including lack of access to formal credit, and strict lending requirements and rigid governance structures, weak markets demand for and ability to pay for healthier foods, a private sector seeking its complementary role next to strong government lead initiatives, and weak (digital) infrastructure on which agribusiness can build. Access to finance is a particular issue, with collateral requirements often extremely high, ranging between 125% and 200% loan values. Similarly the cost of borrowing is very high, with interest rates ranging between 18% and 20% per annum. USAID research indicates that much investment is predominantly for pre-harvest working capital and focused on maize, rice, dairy, tea and coffee value chains, and that support to MSMEs producing and marketing potatoes, beans, and horticultural products is almost non-existent.
02. Is there hope?
There are promising trends. Key national strategies, development plans and initiatives aim to expand the role of the private sector, including NST1, PSTA 4, FSDP 2, EDPRS 2 and Vision 2020. Digital entrepreneurship is developing, with 1.2 million users of mobile banking services recorded in 2017, approximately 10% of Rwanda’s population. New promising innovative and digital products are also surfacing. For example, weather- based crop insurance, business development funds and warehouse receipt systems, using mobile apps, reach more and more farmers each day. The Smart Nkunganire System (SNS) manages cashless transactions of subsidy and supply of agro-inputs to farmers, and small loans and savings are also made possible through KCB’s Mobile App.
03. What is the challenge to food systems leaders?
Whilst the private sector must deal with many challenges, there are also many opportunities. Food systems transformations need whole new inclusive agribusiness models, service delivery models, new product development focusing on nutritious and affordable foods and making use of digital opportunities to reach many farmers, quickly. Food entrepreneurship requires leaders capable of identifying what business opportunities can create inclusive opportunities for large numbers of MSMEs in the midstream, who in turn can catalyse new opportunities for producers and deliver new products to consumers. It requires building relationships with government initiatives, farmers’ groups and financial institutions as well as changing opinions about food entrepreneurship as a force for good. Working with other Fellows, you can grow further into being a catalyst for inclusive, healthy and rewarding food entrepreneurship delivering Rwanda’s food systems goals.