Rwanda is set to commence the rollout and implementation of rehabilitation of irrigation systems on over 17,600 ha, as well as land husbandry development on about 11,000 ha following approval of a $300 million financing facility for the purpose.
The World Bank Group this week approved $300 million in financing comprising International Development Association (IDA) grant and credit, to help the country increase irrigation, commercialization, and access to finance and insurance for farmers and other value chain actors.
The initiative dubbed Commercialisation and De-Risking for Agricultural Transformation Project (CDAT) will support the government to provide services and create an enabling environment for the private sector throughout the agricultural value chain.
Officials say that it will finance public investments in the seeds sector, develop and rehabilitate irrigation systems on over 17,600 ha, provide accompanying land husbandry development on about 11,000 ha in surrounding water catchment areas to increase productivity and promote climate smart agriculture.
The World Bank noted that the initiative will also support commercialization by working with farmers to improve access to markets and availing matching grants for investments in mechanization, post-harvest infrastructure and processing equipment.
The fund will invest in particularly innovative solutions for the sector that can be brought to scale, officials noted adding that they target to benefit at least 235,000 households.
Rolande Pryce, World Bank Country Manager for Rwanda said that commercializing agriculture is essential for Rwanda’s economic transformation and poverty reduction and requires investments that enhance productivity in a sustainable manner, and that generate agriculture value addition and off-farm jobs.
“The Commercialization and De-risking for Agricultural Transformation Project aims to generate marketable volumes of produce and facilitate their access to market, while de-risking and leveraging private sector investment in value generating agri-food activities,” she said.
The initiative will also partner with local financial institutions, to enhance access to affordable financial services and products in the agricultural sector by providing long-term financing and reducing risks and scaling up agriculture insurance.
Åsa Giertz, World Bank Senior Agriculture Economist, and Task Team Leader of the project said that availing financing to farmers and cooperatives, as well as post-harvest value chain actors is crucial for the development of the sector.
“This project seeks to build the agricultural finance market by collaborating with different financial institutions to implement models for agricultural financing while at the same time making the agricultural sector less risky to invest in. The project will holistically support agricultural value chains and the complementary roles of public and private actors in agricultural transformation,” Giertz said.
The initiative could accelerate the recovery of the agriculture sector following the impact of Covid-19.
For instance, the fourth Strategic Plan for Agriculture Transformation (PSTA4) launched in 2018 – and runs through 2024 and targets among other outcomes, improved productivity and inclusiveness of agricultural market systems, was affected by the pandemic.
Though agricultural activities were allowed to continue during the Covid-induced lockdowns, along with the trade of foods even during strict measures to control the Covid-19 pandemic, the sector players say that there was disruption due to demand patterns.
The strategy will be achieved by strengthening market-oriented production, productivity, and processing of diversified agricultural commodities, through increased engagement of the private sector.