Background

Rwanda, an East African nation with about 13.5 million people, relies heavily on agriculture for its economy. However, young and female-managed agribusinesses often struggle to obtain financial resources. These financial challenges limit their ability to grow, raise income levels, and create jobs.

Only 26 percent of the population uses services from licensed commercial banks and financial institutions regulated by the National Bank of Rwanda. Most agri-MSMEs are excluded from formal finance due to perceived risk, high collateral demands, and financial products that do not match their business cycles. This is especially true for women and youth, who often operate informally and without traditional assets.

Development finance solution

UNCDF collaborates with the World Food Programme (WFP) and the Mastercard Foundation to address this financing gap using catalytic capital and risk-sharing instruments. The objective is to attract private capital to rural and underserved markets by supporting local financial institutions in lending to agri-MSMEs that might not otherwise receive funding, such the Winnaz potato chip manufacturers.

Production manager Egide Niyibiz showing the Winnaz potato chips. Credits: UNDP Rwanda

By targeting youth- and women-led enterprises, the initiative promotes inclusive rural transformation and job creation while enhancing productivity along agricultural value chains. In doing so, UNCDF supports Rwanda’s national development priorities and strengthens food system resilience with a focus on underserved.

In July 2024, under the WFP Rwanda BRIDGE initiative, UNCDF issued a two-year, $500,000 portfolio guarantee to Urwego Finance, a local deposit-taking microfinance institution. The guarantee covers up to 70 percent of the losses in parallel, allowing Urwego to extend credit to youth- and women-owned agribusinesses that typically lack sufficient collateral to qualify for loans.

This risk-sharing mechanism lowers the barriers for MSMEs to access finance, reducing collateral requirements that can otherwise reach 130–150 percent of the loan amount. The guarantee plays a catalytic role by absorbing part of the risk, making it easier for local lenders to serve high-impact segments of the agricultural economy.

The initiative also provides technical support to enhance Urwego’s agri-lending capabilities, extends outreach to underserved groups, and implements monitoring systems to track impact and performance.

Workers peeling tomatoes in Winnaz factory. Credits: LMFTF

Outcome

The initial $500,000 guarantee has been fully utilized, unlocking $714,286 in loans to 92 agribusinesses across Rwanda, representing a leverage ratio of 1.42x. These investments are expected to generate over 3,220 jobs, particularly in rural areas and among youth and women.

Encouraged by the strong uptake and impact, Urwego has requested a follow-on guarantee of an additional $500,000 to continue expanding its agri-lending operations. This top-up is expected to additionally crowd in $714,286 in private capital and aims to disperse 100 loans and create 3,500 jobs.

This growing pipeline underscores the replicability and cost effectiveness of UNCDF’s approach: using concessional capital to de-risk investments and crowd in private finance for market development.