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Kigali, Rwanda│Friday, November 3, 2006

Rwanda’s banking and agribusiness sectors are both winners as a result of the U.S. Development Credit Authority (DCA) program, which is being expanded to encourage Rwandan private banks to lend money to rural agribusinesses.

USAID/Rwanda, the US government aid agency, has signed agreements with Bank of Kigali and Banque Commerciale du Rwanda (BCR) which will enable the two banks to lend up to US $5.1 million in the Rwandan rural agribusiness sector over three years (2006-2009). This program builds on the success of the 2004-2007 agreement with the Bank of Kigali, which after one year had lent US $1.8 million to the agribusiness sector through this mechanism. The banks will use their own money and lending procedures in deciding clients’ credit worthiness, but the U.S. Government covers a percentage of the risk and also provides technical assistance to the borrowers.

Initially, it is expected that the loans will focus on Rwandan’s rapidly growing specialty coffee industry, to which USAID has already contributed some US$10 million in six years. It was in part through the DCA loan program that Rwanda’s specialty coffee went from being virtually unknown, to being featured by Starbucks and other large coffee retail companies. Today demand far exceeds supply, with Rwanda a much sought-after origin for specialty roasters and large retail chains in the U.S. and Europe. In just two years, Rwandan specialty exports have increased almost five-fold – from 733 tons in 2004 to 3,200 tons in 2006, while its total coffee export receipts (for specialty and ordinary beans) have increased from $32 million in 2004 to an expected $59 million in 2006.

Other products that have demonstrated their export strength -- such as tea, pyrethrum, essential oils, chili peppers, and passion fruit – may also be eligible for the loans. Both cooperatively and individually managed agribusinesses are eligible for this program.

“This is truly a win-win investment in rural agriculture,” explains USAID/Rwanda Director Kevin J. Mullally. “Before our DCA program, only 2% of the total loan portfolio in Rwanda went to rural agriculture, even though that sector represents 45% of the country’s gross domestic product and employs 90% of the population. Now, twice that amount is going to the agricultural sector. This translates into helping to build Rwanda’s economy through more jobs, more access to finance to grow businesses, and healthier banking and agribusiness sectors. It is truly a partnership between the US Government and local banks to share risk and overcome the credit problem that is hindering the growth of the rural sector.”

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