Rwanda: EIB invests 100 million euros in agricultural businesses
The main objectives are the response to climate change and the incentive for women to work
100 million euros in financing for farmers and agricultural businesses across Rwanda, with the aim of resisting the impacts of climate change. At COP28 in Dubai, the European Investment Bank (EIB) and Bank of Kigali confirmed the development of a new targeted sustainable agriculture financing initiative: this is the first business financing program for climate resilience in Rwanda and of "the European Investment Bank's largest-ever support for private sector investment in Rwanda", according to an EIB press release.
The scheme is expected to unlock €100 million in new climate investments from small farmers and agribusiness, as well as improving access to finance for businesses, whose owners are women. “The ultimate goal is to deliver on our ambitious climate action plan to reduce carbon emissions by 38% by 2030. Achieving this goal will require $11 billion, so we encourage everyone to take part in this initiative. BK has led the way for commercial banks in Rwanda in incorporating green financing,” said Rwanda Green Fund CEO Teddy Mugabo .
The initiative aims to address long-standing credit constraints that hold back private sector agricultural investment by facilitating access to dedicated long-term loans and will be implemented in close collaboration with the European Union, which supports agricultural programs in Rwanda including value chain development, particularly in horticulture and aquaculture.
Since 1970, Rwanda has recorded a temperature increase of 1.4 degrees Celsius, higher than the global average. Most parts of Rwanda are expected to experience increased rainfall, which will increase the intensity and frequency of flooding and landslides. The EIB's intervention is therefore crucial for a country where 60% of workers are employed in the agricultural sector. However, as the EIB statement recalls, access to financing in the agricultural sector is limited by, among other factors, the lack of collateral, credit history and limited access to capital markets.
In Rwanda, the gender gap in access to agricultural loans remains significant, with 74.5% of men having access, while only 25.5% of women have access, while the number of female-run agricultural businesses, although in the African country, approximately 71% of women are employed in the primary sector.
The new initiative will include dedicated funding for businesses owned and operated by women, as well as the employment and service of women. The financial scheme will support investments to increase agricultural productivity, improving access to finance across the agricultural sector and the economic empowerment of women. At least 30% of the total funding under the new scheme will be dedicated to female entrepreneurs or businesses where the majority of employees are women.
EFA News - European Food Agency