Access to microcredit for smallholder agricultural producers in Rwanda (Africa): Emerging challenges and issues

Agricultural credit accessibility has been seen as important way sustainable production activities and a way of breaking the vicious cycle of poverty in developing countries. Microcredit in Rwanda provides a realistic platform for economic growth. Nevertheless, small agricultural producers in rural Rwanda are not able to access microcredit given the high levels of poverty. This study examines the emerging challenges and issues faced by smallholder agricultural producers in Rwanda. Three hundred smallholder farmers were randomly selected from three sectors of Huye District. The results of the findings shows that 136 (45.3percent) of smallholder agricultural producers in the study area accessed microcredit while 164 (54.7 percent) did not accessed microcredit. The results show also that there is a strong relationship between participation in microcredit and age, marital status, education, main occupation and distance. The study revealed that the major challenges and issues to access microcredit for smallholder agricultural producers are lack of collateral, high interest rate, poverty, lack of knowledge and information, short loans repayment, long process to obtain loans and high transport cost. There is a need for the Government and financial institutions to put in place the insurance mechanisms against risks in agriculture which guarantee loan repayment.