Attracting Finance for Agriculture in Rwanda, Enabled by a Systemic Approach

Ailsa Buckley, CASA Market Systems Lead

There are major challenges facing Rwandan agri-SMEs trying to attract finance, such as the perceived high risk and volatility of agriculture, the limited financial products suited to agriculture and SMEs, weak value chain structures, poor quality supply and lack of aggregation and market linkages, not to mention limited institutional capacity (on both lender and agri-SME sides) as well as policy constraints. Because many of these challenges co-occur, they amplify each other. That’s why, even though agriculture is central to Rwanda’s economy, the share of bank loans going to agriculture remains extremely low. So, attracting finance by making agri-SMEs investment-ready and de-risking them for investors is critical. Actions that help unlock commercial loans, small equity/grants, and significant private counterpart contributions are the keys.

It’s a systemic issue which individual businesses cannot solve alone …

Therefore, it needs the kind of systemic responses that FCDO’s CASA Programme has been demonstrating by working both with agribusinesses (demand) and with investors/financial actors (supply), so that businesses haven’t just become “ready”; they have been actively showcased to potential financiers. CASA has used small, catalytic capital (asset grants and technical assistance [TA]) to address immediate constraints that often block investment (e.g., lack of processing capacity, weak financial systems). The programme has also generated credible evidence by developing learning products and implementing events that have reduced informational barriers and changed investor perceptions about risk/returns in smallholder-linked agribusiness.

So, what exactly has it done …

• CASA has ensured investment-readiness support for agri-SMEs: It has facilitated tailored TA and business-development services (BDS) to target agri-SMEs to ensure they can produce credible business plans, financial projections and investor materials, key steps to attracting finance. It has worked with local advisors to deliver this support, such as de-risking experimentation by BDO East Africa to work with agri-SMEs on financial management and investor materials, demonstrating a replicable model for other advisors and agri-SMEs.
• CASA has utilised targeted small grants to de-risk early investment: It has employed these alongside cost-sharing capital to enable businesses to acquire productive assets and reduce investor risk. It has supported partner agri-SMEs such as Platinum Agribusiness with a grant plus TA, which has improved the farm’s productivity, demonstrated the business case for follow-on financing and strengthened its investability. 
• CASA has driven investor convenings, matchmaking and facilitation: It has organised investment meetings, investor tours and B2B events and put agri-SMEs in front of commercial and impact investors, accelerating deal conversations and pre-assessment processes. These events have helped build pipelines and convert interest into finance. 
• CASA has delivered evidence, learning and communications to reduce perceived risk: It has published country learning papers, investment leveraging briefs and case studies that have demonstrated the commercial viability of smallholder-linked models. This evidence has helped change investor views about risk/return in smallholder agribusiness and supported policy/investor decisions. (Browse the Evidence and Learning page on the CASA website.)
• CASA has facilitated blended modalities and catalysed counterpart finance: It has helped to structure blended arrangements (grants plus TA plus commercial finance) and encouraged contributions that have leveraged commercial investment and mobilised private counterpart contributions.

And how exactly has it done it …

Systems thinking and practice has shaped how CASA intervened, who it worked with, and what kinds of systemic shifts it sought.

• CASA targeted root causes of financing blockages: It analysed why agri-SMEs struggle to attract finance and designed interventions to fix those underlying constraints, whether it be poor investment-readiness, limited lender understanding of agriculture risk, the absence of credible pipelines of investable agribusinesses, or underdeveloped BDS and advisory markets. This means CASA’s solutions have system-level relevance.
• CASA has worked through market actors: It has strengthened existing market players, such as partnering with local BDS providers, strengthening local agribusinesses through co-created growth and investment plans, working with banks, microfinance institutions, insurers, and investors to understand and adapt their offerings, and supporting processors, aggregators and offtakers who create demand pull. This means CASA leaves behind strengthened capabilities among actors.
• CASA has catalysed systemic incentives for investment: It has focused on leverage through small inputs that shift incentives such as modest asset grants to unlock commercial interest, tailored TA to lower transaction costs for investors doing due diligence, and investment convenings to change investor perceptions of risk, as well as practical demonstration that the poultry, dairy and horticulture value chains can be commercially viable at agri-SME level. This means that CASA has contributed to changing the cost-risk-return equation for lenders and investors, making agriculture a more credible sector.
• CASA has built inclusive, resilient value chains: It has supported the system by targeting constraints along value chains whether they be quality of supply (working with smallholder-linked agri-SMEs), market access, processing capacity, post-harvest handling, or certification and standards. This means that CASA has reduced operational risks, which are a major barrier to finance. Stronger value chains mean more predictable cashflows which mean greater lender confidence.
• CASA has generated evidence that shifts market norms: It has leveraged information as a market good by producing investment insights, value-chain financial analyses, case studies of investable agri-SMEs and lessons on risk reduction in agriculture. This means that CASA has captured and shared evidence to influence banks, investors, and policymakers, helping to reshape how the financial market views agri-SMEs.
• CASA has ensured sustainability beyond itself: It has catalysed change that outlives it through a strengthened local BDS ecosystem, agri-SMEs now capable of managing finance and investor relations, financing institutions with more realistic risk-assessment frameworks and demonstration effects that crowd-in future investment.

Together this demonstrates that CASA Rwanda has been well aligned with local incentives, and that outcomes will live on. In three short years, it partnered with nine agri-SMEs and two support organisations to improve investment readiness. In Rwanda, it leveraged commercial investment of about £397,986 and mobilised over £1 million in counterpart contributions from private partners, demonstrating CASA’s catalytic role in mobilising private funds.