Farmers and agricultural businesses in Rwanda are set to receive a significant boost in their efforts to adapt to climate change, thanks to a new EUR 100 million climate finance initiative. The European Investment Bank (EIB) and the Bank of Kigali have announced plans to develop the first climate resilience business finance scheme in Rwanda. This initiative, launched at COP28 in Dubai, aims to provide support for farmers and agri-businesses in preparing for extreme weather events, increased drought, and heavy rains.
The funding will go towards improving access to finance for businesses owned by women, as well as smallholder farmers and agribusiness companies. The initiative aims to address long-standing credit constraints that have hindered private sector investment in agriculture. By providing dedicated, long-term loans, the scheme aims to accelerate climate change adaptation, promote sustainable development, and enhance economic opportunities for women in Rwanda.
Rwanda has experienced a temperature increase of 1.4 degrees Celsius since 1970, which is higher than the global average. The country is projected to experience more intense rainfalls, leading to increased frequencies of floods and landslides. By investing in modern farming technologies and techniques, smallholders can improve agricultural productivity and adapt to changing climate conditions. The funding will also help ensure a more stable and secure food supply by enhancing the resilience of smallholders against extreme weather events.
Access to finance has been a significant challenge in the agriculture sector in Rwanda, particularly for women. Currently, only 25.5% of women have access to agricultural loans, compared to 74.5% of men. To address this gender gap, the new initiative will include dedicated financing for businesses owned and managed by women. At least 30% of the total financing under the scheme will be allocated to female entrepreneurs or businesses with a majority of female employees.
Agriculture plays a crucial role in Rwanda’s economy, employing over 60% of the population. However, limited access to finance has hindered the sector’s growth. By providing substantial climate finance, the EIB and the Bank of Kigali aim to support vulnerable communities and foster sustainable agricultural practices in the face of climate change.
The new EUR 100 million climate finance initiative is expected to be launched early next year and will be implemented in close collaboration with the European Union. The partnership between the EIB and the Bank of Kigali, backed by the EU, demonstrates the commitment of financial institutions to address the challenges posed by the climate emergency and support vulnerable communities in Rwanda. Through this initiative, farmers and agribusinesses in Rwanda will be better equipped to adapt to climate change and secure their livelihoods.
