Most financial institutions are not willing to offer credit to agricultural sector.
Lack of funding is frustrating young farmers who have developed interest in venturing into commercial farming to improve their income.
Innocent Bulindi, chief executive of the Business Development Fund (BDF), a government body set up to ease access to business finance, said financing entities are still largely averse to supporting agriculture sector due to its volatility and unpredictability.
“We have a number of products, among them guarantee fund, but our portfolio towards agriculture hasn’t changed much, the agricultural sector is still a tough one.
“The money going to the sector is still relatively low, it is only tea and coffee that seems to have matured and not much in need of our support.”
He said although there has been progress in reducing risks in the sector through agriculture insurance, there is a need for supporting supply and value chain financing.
“It is not enough to only look at primary production, value and supply chain financing remains critical, farmers are facing post harvest, processing and logistics challenges, unfortunately these challenges are scaring off banks,” he said.
Small-scale farmers who are seeking to tap into supplying exports markets affordable inputs like pesticides and irrigation equipment.
Although it is a government subsidy programme where a farmer can get an irrigation pump at half price, the conditions have proved untenable for many farmers.
One of the requirements is to have leased land for up to three years, which is difficult because most farmers find it too expensive to lease land for that long, preferring a shorter period of at least one year.
In the last nine years BDF has disbursed at least Rwf512million to 81 businesses owned by youth in agriculture.
Many of the youth are venturing into farming of crops like red pepper, chia seeds, macadamia, avocados and beans, as they seek to take advantage of availability of market.
Ntare Ronald has a day job, but he has always wanted to start a side business to supplement his income, which he would grow and with time be completely self employed.