Rural Finance Thematic Workshop Kigali, Rwanda 16 - 18 September 2009

The co-hosts of the regional rural finance thematic workshop, the International Fund for Agricultural Development (IFAD) has supported Rural Finance Knowledge Management Partnership (KMP), International Cooperative Alliance (ICA) and the Swedish Cooperative Centre and VI Agro-forestry (SCC-Vi), are happy to announce that this year's workshop will take place in Kigali , Rwanda. The workshop will take place on 16-18 September 2009. The theme for the workshop will focus on “value chain financing: the opportunities and challenges ”.

DAY ONE - 16 SEPT 2009

The third joint regional rural finance workshop kicked off today at the Laico Hotel Umubano, Kigali hosted by the Government of Rwanda (GOR) and the Association of Microfinance Institutions of Rwanda (AMIR). A total of 150 participants attended this year's workshop. The participants were from the following countries: Burundi, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe.


The workshop was officially opened by the Permanent Secretary Ministry of Agriculture and Animal Resources (MINAGRI), Mr. Ernest Ruzindaza officially opened the workshop. The other key speakers at the opening ceremony included the Association of Microfinance in Rwanda (Mr. Faustin Zahiga- Chairperson), SCC-Vi (Ms. Carina Andersonn - Regional Director), ICA representative (Mr. Stephen Kiwanuka), Swedish Mission for Rwanda and Burundi (Mr. Richard Momboma- Head of Mission), IFAD representative (Mr. Claus Reiner - Country Programme Manager, Rwanda). The co-host of the thematic workshop emphasized their commitment to continued support to the annual knowledge sharing event. The development partners emphasized the appropriateness of the theme on value chains as fitting their objectives of poverty reduction for rural areas.

  • explore the general understanding of value chain financing
  • share experiences on the financing opportunities that exist within a given value chain
  • find out the challenges that impede financing with a given value chain
  • provide participants with an opportunity to interact with rural farm enterprises and agro-processors to learn and share experience during the field visits
  • create a knowledge management forum for discussions and sharing of experience on the theme "value chain financing: opportunities and challenges"
  • collate the final workshop conclusions and disseminate to all participants for cross learning


Overview of Rural Finance in Rwanda

As is always the tradition, the host country in this case Rwanda is given an opportunity to share on the status of rural finance in the host country. The two presenters on this topic came from the representing the AMIR and MINAGRI. The key issues of the two presentation came from an MINAGRI and National Bank of Rwanda (BNR) supported workshop on agricultural finance held on 10 Sept 2009. This workshop brought together the government supported projects, development partners, commercial banks, micro-finance Institutions, and farmers to discuss the challenges, recommendation and action to improve access to agricultural finance.

The MFI face many challenges in providing agricultural finance in Rwanda. The main challenge facing MFIs is that agricultural investments requires medium and long-term financing. Although the GOR has tried to provide access to these type of resources such as guarantee funds, Rural Investment Facility (RIF), etc. but the the MFIs and the commercial banks indicated that the procedures to access it quite cumbersome. The findings are: (i) experience of the BNR managed Agricultural Credit Guarantee Fund (ACGF) is that the perceived risk by commercial banks on lending to agriculture is higher than the actual risk; (ii) lack of agricultural expertise within the banks; (iii) lack of appropriate agricultural loan products; (iv) high transaction cost of lending to smallholder farmers; (v) lack of repayment discipline due to grant culture; (vi) lack of skills on the development of bankable proposals (although the RIF has put in place consultants to assist the farmers but has faced challenges) and finally low demand for loans. One recommendation on the AGCF was that GOR should not be in the business of doing business but providing an enabling environment for the private sector to take the lead.

Value Chain Financing

There were several papers on this topic from various country experiences mainly from Kenya, Madagascar, Rwanda, Tanzania, and Uganda. The key papers touched on the value chain financing concepts and examples of value chains opportunities and challenges. The first key paper presented by Mr. Peter Kivolonzi looked at the fish value chain around Lake Victoria. Fishing is a cut throat business for the women folk especially in low seasons. The presenter showed a powerful video on how the women fish traders due to lack of finance resort to sex for fish with the fishermen and transporters. As a result the fish value chain is bedeviled by HIV/Aids pandemic. The presenter reiterated the need to provide micro-finance to the women to enable to pay cash for the fish.

The second paper presented by the passionate Mr. Mark Owusuansah provided further rationale, tools and methodologies, and processes on the value chain financing and used the example of CIDR's experience on the Paprika value chain in Tanzania. The presenter caused a stir with the participants when he emphasized that all actors in the value chain are important including the dreaded 'middleman". He further caused a long debate when he stated that one should not be bothered about how much another actor is earning along chain and concluded that the weakest link on the chain is always ejected out of the chain. The participants felt this statement is valid for market that function but in imperfect markets there is chance of the strongest in the chain to take advantage of the farmers or women fish traders (weaker link in the chain) which at times requires interventions to correct it.

The Cooperative Bank of Kenya (Coop Bank) experience by Mr. Peter Ndegwa showed the bank is owned by the cooperatives movement who are the majority shareholders of the bank. One out of every five Kenyans is a member of a cooperative. The Bank has provided links with the community based savings and credit cooperatives (SACCOs) as well as back office support and capacity building which has resulted in some of the largest SACCOs in Africa. The presenter dwelt on the role of the SACCOs in value chain financing for enterprises such as tea, coffee, dairy, fish, etc in Kenya. The presenter presented their Maziwa loans that target the dairy value chain. The bank has forged strong partnerships with various development partners in this effort.

The sensational Equity Bank presenters Mr. Henry Karugu and Mr. George Irungu teamed up to demonstrate the banks extreme passion in agricultural lending. Equity Bank which started as a building society has over the years transformed itself into a leading micro-finance bank in Kenya. It's edge is in responding to demand. Equity presented the case on strong partnership along the maize value chain finance through a partnership of IFAD, AGRA and AGMARK called Kilimo biashara. Kilimo biashara is farming for business targets several value chains. The bank recently released a wining marketing branding named " I am so and so and I am a member" which has made the bank a household name in Kenya.

The experience of Kenya Gatsby Trust through its semi-autonomous Biashara Factors (BF) was presented by Ms. Beatrice Obara. BF is involved in invoice discounting where a farmer or business who has an order to supply goods and services. The farmer or traders would go to BF and access finance based on the invoice. The invoice is paid a certain percentage and when the invoice is paid the final amount is paid to invoice holder. This is another exciting innovation which has gone a long way to provide finance to a segment that would otherwise not be able to access finance.

The Madagascar Experience from one of IFAD supported programme PROSPERER presented by Mr. Tovonirina Rokokoseheno showed how the project is working with farmers and embedding finance by linking the farmers to micro-finance institutions. The challenge in Madagascar is the recurring cyclones that is a major risk to agriculture lending. At the moment there is no insurance to cover cyclones. Therefore the cyclone risk is covered by the farmers.

Warehouse Receipts System
Warehouse receipts, contract farming and trader guarantee schemes are some of the interesting innovations in rural finance that have been successful in providing storage to enable farmers to access much needed cash at harvest but in addition benefit from farm price increases. The examples of warehouse receipts presented by Mr. Frank Manzi came from two IFAD supported programmes Agricultural Marketing (developed the warehouse receipts and regulations) and Rural Finance Support (provided the financing) in Tanzania. The presenter gave a step by step process on how the warehouse receipts system works with the roles of the different actors including the warehouse manager, collateral manager, insurance company, commercial banks, and SACCOs. Despite some challenges the Chimala SACCO experience using the classical WRS approach shows it can be profitable venture.

The Rwandan experience of CAF Isonga in the southern region presented by Mr. Joseph Kabundi was exceptional in its simplicity and innovative nature of its operations. The CAF Isonga model use a tripartite approach with farmers, warehouse and the micro-finance institution. The micro-finance institution has innovated to finance the whole chain instead of the classic WRS that finance only at the point of storage. The models although new has been able to demonstrate success in increasing farmer profitability. The participants had the opportunity to see this operation during the field visit.

The Ugandan experience by Mr. Patrick Muumba showed that the cooperatives models with a warehouse even in the simplest form has been beneficial to cooperative members. The technical support to the cooperative is provided by the Uganda Cooperative Alliance (UCA). In this case the amount of loan that a farmer can access is 60% of the value of the crop held in the warehouse. In Tanzania case the farmers could access up to 75% of the value.

Finally the presentation of Rabobank, Netherlands experience in the region by Mr. Hans Boggard showed that the warehouse receipts have been successfully adopted by Rabobank partners such as the National Micro-finance Bank (NMB). He also highlighted that there some minimum requirements for a successful WRS which include regulatory framework which exist in some countries and not in others. The other is the market for the produce in the warehouse. The emphasis was that the WRS works well when there is forward contracts that can ensure market for the produce.


On Thursday, participants went out to the field to see for themselves how value chain financing has been put to practice. Participants were divided into four groups to visit different parts of the country: a coffee washing station and an MFI in Eastern province; two cooperative societies in Northern Province; an MFI working with a rice farmers cooperative and uses the warehouse receipt system in Southern Province; and the Nyabihu Tea Factory and Sina Gerard Enterprise (an agro-processor) in Western Province. By the time they came back it was too late for the groups to report in plenary so the event was postponed to Friday morning. The visits would assess the following: the part of the value chains the institutions addressing; opportunities for value chain financing? The challenges for the rural finance institutions; and what they learn from the trip.
Participants arrived tired and late in the evening and it was not possible to have them give their trip reports. It was decided they would report on their field trips tomorrow morning.


Everyone woke to a fresh start. The group rapporteurs presented what they observed guided by the four key field trip deliverables. Participant’s comments were wide ranging. They were happy to see for themselves what they had discussed during the first day and relate it to what was actually happening on the ground. They saw some very enterprising farmers, agribusinesses, and MFIs and cooperatives at work. The warehousing receipt system was particularly an eye opener for those who had not seen it at work. In short, it was a good practical learning experience and they could now relate to the concept of value chain financing. They even recommended that one of the SACCOs was really in intensive care and needed urgent intervention from the regulating body.

Prof Magimbi from the University of Dar es Salaam presented an International Labour Organization (ILO) study on the global crises (he said it was not just the financial crisis we have to contend with) and how they have impacted on rural financing and cooperatives. His recommendation was that grouping into cooperatives provides economies of scale and helps to protect groups from the crises. There was no doubt the global financial crisis had trickled down to the village level as shown by decreased savings, reduced savings and credit, and unemployment. But there was still a silver lining because deficits somewhere mean farmers can be helped to produce more for markets both internal and external.

The last presentation was on gender and training and mainstreaming which was financially supported by Food and Agricultural Organization (FAO)gender grant. Mr Getaneh Gobezie of Ethiopia sent the participants in stitches with his analysis of gender in rural financing. An important point he raised is that women are not a homogeneous group and product developers should take this into consideration. There were good examples in Uganda and Sudan of tools for mainstreaming gender in rural finance that have empowered women.

Miriam Cherogony then led participants to evaluate the workshop. Most participants said they could now relate to value chain financing, it was previous a little understood concept. They also said that in future there should be a few key presentations that will be discussed exhaustively.

Meanwhile the guest of honour, Mr. Damien Mugabo, head of Rwanda Cooperative Agency, arrived and Miriam took him through summarized deliberations of the workshop. The guest of honour then thanked all organizers and participants and hoped the deliberations of this workshop will be used to improve the livelihoods of the poor. He officially closed the workshop.


Getaneh said…
Dear Chorogony and all participants,

Thank you all for the active participation in the workshop, which has been a high level learning forum.

I have benefitted especially from the comments and feedbacks I received on the ‘GENDER AND RURAL MICROFINANCE’ training which I delivered.

As you might have noticed, my presentation has been meant mainly for 'practitioners' in rural finance, focusing on African context, and NOT for academicians specifically. ... So the slides contain materials which are drawn from many years of experience in rural areas, from networks on women and rural finance, recent manuals and guides developed by UN organs like FAO, IFAD, ... and from works of international NGOs like OXFAM-Novib (WEMAN Network) etc.... Thus, for example, the definition of 'Gender' (which the professor harshly criticized) is taken directly from FAO!! …… I can forward the doc, and we can discuss more. I am very confident that NONE of the slides (PPT) contain materials which mis-represent reality or which have no background....

Thus, since I am trying to publish the paper, I would like to hear more on other dimensions apart from the mainstream 'patriarchal' system, especially the one in Malawi, Tanzania, etc (and materials!).....As well as on the 'collateral' issues, etc etc.

The issue of 'ASPIRATION FAILURE' has also been raised for more elaboration during the workshop. I believe this is very important, and need to be discussed very well -- as this is impacting not only rural finance, but the whole development effort in Africa!! I have raised this issue several times, and have written a paper for Association of Ethiopian MFIs (for a 2008 annual conference, and published) titled:


This paper is also posted at the CGAP/microfinancegateway's (recommended) paper list, and can be viewed from:

I hope this helps, and look forward to hear reactions from the participants.


Getaneh Gobezie
Anonymous said…
Nice information about rural finance workshop, You can also get information about Currency rates and Make Money Online. Thanks Getaneh , nice information also provide.
Anonymous said…
Thank you all for the active participation in the workshop, I read all you IFAD social reporting blog. This blog very informative about finance. You can also find information about accountants leeds.
Delly News Blog said…
FINO is into designing and implementing innovative technology solutions - systems, services and networks - that will enable a greater range of financial services to reach the un-banked masses at a lower cost. After an established presence in the domestic market Microfinance Service Providers FINO's vision is to venture out to overseas market where the opportunities to serve the unbanked is enormous.
It is glad to see this blog, nice informative blog, Thanks for share this article.I'm very thankful to the author for posting such an amazing development post.
Finance Thesis said…
After read blog topic's related post now I feel my research is almost completed. happy to see that.Thanks to share this brilliant matter.
Buy term paper said…
Technology has brought so many improvements into the world of business. To any sectors in the industry, technology has provided effective and efficient means of improving their operation.
Research Paper said…
The Rural Finance Thematic Workshop Kigali, Rwanda, is on 16 to 18 September 2009, and I think this was some thing to watch such things happens not a lot and it is good for peoples to get know about it.
thanks for the post. the timeline helped me keep track!