Rwanda’s Agribusiness is Investing to Tackle Climate Change

Rwanda climate change agriculture

The European Investment Bank and the Bank of Kigali are collaborating on a new initiative in Rwanda aimed at promoting sustainable agriculture and combating climate change.

This initiative, the first of its kind in Rwanda, represents the largest support ever provided by the European Investment Bank to the private sector in the country.

It is expected to allocate approximately 100 million euros to climate investments by smallholder farmers and agribusinesses, with a particular focus on improving access to finance for women-owned businesses.

The joint initiative, set to be launched in 2024, aims to provide farmers, agribusiness companies, and agricultural cooperatives in Rwanda with easier access to 100 million euros in new financing.

Historically, private sector agriculture investment has been hindered by credit constraints, such as a lack of collateral and credit history, as well as limited access to capital markets.

However, this project has the potential to facilitate access to loans specifically tailored for the agriculture sector over the long term.

In addition, the European Union is already supporting agricultural programs in Rwanda and will collaborate closely on the implementation of this new initiative.

The climate change challenge

With the adverse impacts of climate change increasingly affecting agricultural production and the stability of the agribusiness sector, it is crucial for companies and smallholder farmers to invest in adaptation measures and sustainable development.

This new scheme will aid in enhancing agricultural productivity, farming technologies, and techniques, ultimately leading to increased crop yields and improved resilience to changing climate conditions.

Moreover, it is important for farmers to be capable of withstanding extreme weather events and climate-related disruptions, as their resilience directly contributes to ensuring a more stable and secure food supply.

Agribusinesses themselves also need to become more resilient by diversifying their income sources. In Rwanda, agriculture currently accounts for over 60% of total employment.

Addressing the gender gap in agriculture is another crucial aspect of this initiative. Currently, agricultural loans primarily benefit men in Rwanda, with only 25.5% of women having access to them, compared to 74.5% of men. This is despite the fact that 71% of all employed women work in agriculture.

To tackle this disparity and create economic opportunities for women, the new initiative will include dedicated financing for businesses owned and managed by women, as well as employment opportunities that specifically cater to women. The finance scheme will support investments that enhance agricultural productivity, improve access to finance across the agriculture sector, and economically empower women.

At least 30% of the total financing provided through this new initiative will be specifically allocated for female entrepreneurs or businesses where the majority of employees are women.