Critical analysis of opportunities and challenges in agricultural banking in sub saharian countries: Rwanda perspective

Abstract

This study investigates opportunities and challenges in agricultural banking sector in Sub-Saharan countries: Rwanda perspective. The study compares opportunities and challenges found in agriculture banking system in Rwanda, the role of agricultural banking and its contribution to the economic growth as well as the role played by financial institutions in financing agriculture sector. The case studies are 7 cooperatives and their 210 members in total. The researcher used purposive sampling and questionnaire method in addition to interviews. The findings confirm that there are potential opportunities in agriculture financing which is the justification of the establishing the agricultural bank in Rwanda as recommended in the chapiter5.Those opportunities are :High turnovers from agriculture, the sustainable and economic growth of Rwanda, emerging of insurance companies ,the need of food security in the word, the increase of the agro-processing plant, land consolidation, irrigation system, the farmers cooperatives and association, more funds and grants as well as security cover, shifting from substance to market oriented agriculture and regional integration .The findings shows that the Government of Rwanda have invested a lot in agricultural in terms of land consolidation, the irrigation system ,crops intensification, the guarantees funds ,creation and welcoming the investors to establish the plants for agricultural products transformation as well as market availability which created the high need of finances in this domain also the researcher noted a very big gap in agricultural financing system. It was revealed to the researcher that farmers in the cooperative that were involved in the survey are planning to extend their credit limit due to the high production and high demand. Financial institutions have low participation in financing their businesses nevertheless though 100% of cooperatives and individuals surveyed have requested financial support from different banking institutions, the latter seem to be reluctant to finance the agricultural sector due to the unawares of the raised opportunities.