Market News

Bank Of Kigali Sets Aside Ksh 17.9 Billion Funding For Farmers

BY David Indeje · July 31, 2023 01:07 pm

The Bank of Kigali has committed to providing Sh17.9 billion worth of loans to farmers and businesses across the agricultural value chain.

A portion of the funding will be provided at a concessionary interest rate of as low as 8% per annum, which is less than half of the average lending cost of between 16% and 18%.

The Bank of Kigali CEO, Dr. Diane Karusisi, said the funds, to be disbursed over the next five years, are intended to accelerate the ongoing transformation from subsistence to commercial farming in Rwanda and across East Africa.

BK Group is listed on both the Rwanda Stock Exchange and the Nairobi Securities Exchange (NSE).

“The agriculture sector is heavily underfunded yet it comprises the biggest portion of our GDP. This fund is expected to scale up commercialization of farming by providing affordable loans to farmers and agribusinesses,” said Dr Karusisi.

Banking data in Rwanda shows the agriculture sector accounts for only about 7% of the industry loan book, yet it comprises 30% of the Gross Domestic Product (GDP).

The absence of reliable financial data has been a major hindrance to the flow of funding to the agricultural sector, as banks lack tools to assess farmers’ creditworthiness.

The Bank of Kigali CEO however says this is now gradually changing, as agricultural value chains such as tea, coffee, maize, rice, and dairy become more mature.

Under the Commercialization and De-risking for Agricultural Transformation (CDAT) project, borrowers will get loans at an interest rate of 8% for 90% of the loan applied while the remaining 10% will be advanced at commercial rates.

The second tier, Economic Recovery Fund II(ERFII), will see farmers and agro-processors get 60% of their loan application at 8% and the remaining 40% at market rates.

“There is an option to access full funding at 8% per annum depending on the value chain and the size of the agribusiness,” said Dr Karusisi.

Bank of Kigali reported a 15.1% growth in net profit to KSh7.1 billion for the year ended December 2022.

The profit increase was mainly driven by a 14.5% growth in the loan book to KSh135 billion.

About David Indeje

David Indeje is a writer and editor, with interests on how technology is changing journalism, government, Health, and Gender Development stories are his passion. Follow on Twitter @David_Indeje David can be reached on: (020) 528 0222 / Email: info@sokodirectory.com

Trending Stories

Government and Policy Kenya Is Struggling With Debt As Modest Revenue Is Collected With Limited Development Investment Steve Biko Wafula

Entrepreneur's Corner Kenyan Clients Don’t Care Whether You’re In the ICU: The Brutal Truth Of Entrepreneurship Soko Directory Team

Headlines Are The SACCOS The Infinite Money Glitch Of Kenya? Soko Directory Team

Government and Policy Saccos Clamp Down On Struggling Businesses, Recover Sh491 Million In A Ruthless Crackdown Soko Directory Team

Entrepreneur's Corner The Greatest Skill Everyone Should Master Is The Skill Of Knowing How To Manage Money Soko Directory Team

Market News Safaricom’s M-PESA Hits 34 Million Customers In Kenya Soko Directory Team

Market News Savannah Clinker Withdraws Competing Offer For Bamburi Cement Soko Directory Team

Market News November PMI Expands To 50.9, CBK MPC Interest Rate Decision Tomorrow Soko Directory Team

Market News Savannah Clinker Seeks CMA’s Approval For Offer Extension: No Money? Soko Directory Team

Market News Kenyan Shillings Maintains Resilience Against The US Dollar With Slight 0.06% Shedding Soko Directory Team

Explore Soko Directory

Banking Blogging Commodity Watch Did you know Entertainment Entrepreneur's Corner Feature Government and Policy Headlines Investment Lifestyle Market News Money Opinion Press Releases Stock Watch Technology

Soko Directory Archives

March 2014 (2)

March 2013 (10)
June 2013 (1)