Access to Finance through Value Chains: Lessons from Rwanda

This study assesses the potential of value chains in expanding and deepening access to formal finance in Rwandas rural areas. In Rwanda, access to financial services in rural areas is very low. A value chain approach can serve those willing to expand financial services outreach to under-served rural areas. Interviews with value chain actors highlight the following challenges:

• Large volumes of money injected into value chain development by government and donors on a non-commercial basis;
• Disorganized producers;
• Fluctuating prices;
• Crop diseases;
• Lack of viable markets;
• Limited knowledge about value chains among financial services providers;
• Over-indebtedness of people living in rural Rwanda;
• Lack of internal capacity among financial services providers.

Value chain actors make up a large portion of unmet demand for institutional finance. In order to leverage their full potential, value chains should:

• Improve credit worthiness through better market access, quality control and price risk mitigation;
• Develop synergies between finance providers, capacity builders and marketing services providers.
• Inculcate transparency and sound financial management among producer associations and cooperatives.