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AEGIS European Conference on African Studies
11 - 14 July 2007
African Studies Centre, Leiden, The Netherlands
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Deepening and broadening access to finance through value chains: lessons from Rwanda
| Panel |
74. The Creativity of Practitioners for Development
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| Paper ID | 244 |
| Author(s) |
Habyalimana, Straton
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| Paper |
No paper submitted
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| Abstract | Access to finance helps poor households to take advantage of new business opportunities or expand their small and micro enterprises. The income generated from access to savings and credit contributes to improving the livelihoods of such households. Rwanda ranks among the least developed countries, with 60 per cent of its population living on less than US$ 1 a day. 90 per cent of the population lives on agriculture, which receives only 3 per cent of total credit to the economy. The low level of access to credit by small landholders and farmers can be explained by the risks which shy away banks from the sector. The little credit which is directed to the sector is used to pay agriculture inputs suppliers in rice, coffee, sugar can and other value chain crops. Therefore, gaps remain at other interventions points, resulting in ineffective supply chains. The research paper seeks to understand the reason why financial services providers tend to ignore other links of the value chains. Lack of understanding of the value chain framework and tools hinders financial services providers from venturing their money in agriculture. The research paper identified other links that can be targeted with financial services, such as producers, processors, traders, transporters and wholesalers. Each link requires specific financial products. The research paper explores the potential for rice, coffee and sugar cane value chains to leverage more finance, through value chain analysis, based on three case studies (Inkingi Microfinance, Isonga, and Urunana Microfinance) and interviews with key actors in the value chains. The research also used focus group discussions to assess needs in financial services for the value chains actors. The findings will raise awareness among finance providers in Rwanda on new needs and possible products to address them, thus increase and deepen access to finance for agriculture sector in the country.
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