NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, March 19, 2019

By Emmanuel Ntirenganya

Farmers have increased their ability to pay back the money that they borrow, boosting the financial position of microfinance institutions.

This is reflected in the significant drop of Nonperforming Loans (NPLs)–loans in default or close to being in default — reported by Microfinance Institutions (MFIs).

With commercial banks shying away from financing the agriculture sector because they consider it to be highly risky, MFIs remain the biggest lenders to farmers–especially smallholder farmers.

Microfinance institutions largely serve rural Rwandans, who account for more than 70 per cent of the country’s workforce that is engaged in agriculture. This means that the performance of agriculture has a significant bearing on the financial performance of the microfinance sector.

Photo courtesy of A’Melody Lee.