The Contribution of Development Banks to Agricultural Sector Investment Promotion in Rwanda A Case Study of Rwanda Development Bank (2009-2014)

Abstract

This study aimed at examining the contribution of Rwanda Development Bank (BRD) investment loans to primary sector investment promotion in Rwanda. The specific objectives were to examine the effects of BRD investment loans on investments in agriculture. Literature on the impact of investment loans in promoting primary sector projects was reviewed.  The study population comprised of BRD farmers located all around the country and staff. The famers considered for the interest of this study were those enrolled in the year 2009 and were still active clients of BRD in the year 2014. . The researchers examined the effects of BRD investment loans on famer's agriculture, fisheries and livestock projects for a period of 6 years (2009 to 2014). A population of 120 people consisting of BRD clients (farmers) and staff was considered and sample of 75 respondents was chosen for the purpose of study. To collect adequate data for this study, a questionnaire was used as a tool to collect primary data and documentary review was employed to collect secondary data.  Special program for social scientist (SPSS) was used to analyze data collected and to establish a correlation between the independent and the dependent variables. Findings of the study revealed a significant correlation between BRD investment loans to agriculture, fisheries and livestock sectors demonstrated by; increased cash crop production in the agriculture sector thus increased farmers' income and standard of living accordingly. Increased fishing production, which translated to improved fishers' income and economic welfare and promotion of modern technical skills, which created more employment opportunities to the fishermen. It was further revealed that BRD loans helped the fishing sector to acquire more fishing equipments like fishing boats and nets, establish fishing ponds at their respective fishing sites, all of which increase on fishing productivity and in turn boosting the social and economic welfare as demonstrated by the mean of 4.8133 of the respondents views. In livestock sector, BRD investment loans have helped them to acquire more and better breads of livestock, modern technical skills of farming through training received, develop and improve land use for livestock farming contributing to increased milk production as well as boosting farmer' social and economic welfare. These contributions illustrate the significant contribution of BRD investment loans to the promotion of agriculture, livestock and fishing sectors which are the biggest and key drivers of Rwanda's economic growth and development. However, the study revealed some outstanding challenges that BRD and its farmers are facing in helping the government to achieve its 2020 private investment target of which among others are high loan interest rates that make it hard for farmers to afford, natural disasters that include prolonged droughts, short loan payment schedules and collaterals that farmers require to secure loans.