Press release number: IFAD 04/03

Rome, 7 February 2003 - A loan agreement was signed today at the headquarters of the International Fund for Agricultural Development (IFAD) by H.E. Mr. Celestin Kabanda, Minister of State for Economic Planning, and by Mr. Lennart Båge, President of IFAD. The IFAD loan of USD 16.30 million, will help fund the ‘Smallholder Cash and Export Crops Development Project’, which has a total value of USD 25.54 million.

The project area is located in the provinces of Gikongoro, Kibuye, Kibungo and Kigali-Nigali of Rwanda, a resource-poor, overpopulated country with a predominantly rural (90%) population. The project is targeting about 28 000 cash crop producer families who live below the poverty line and work on small plots or produce cash crops to supplement production of staples. Cash crop production is important for these households as often it is their only source of income. Although coffee is grown widely in Rwanda, present coffee production is at half the level of the 80’s. In fact coffee growers receive extremely poor returns on their production and very low prices on the international market. Even though the quality of green tea leaves produced in Rwanda are among the best in the world, smallholder tea producers receive only a fraction of prices paid in other countries.

Rwanda has potential for significantly increasing the volume and value of its traditional export crops and for diversifying cash-crop production to meet both export and local market demand. With the introduction of the Smallholder Cash and Export Crops Development Project smallholder coffee growers will be assisted to establish primary cooperative societies and produce high quality arabica coffee. The project will also support the development of modern coffee processing facilities by cooperative companies which will then be turned over to poor smallholder growers who belong to the primary cooperative societies. For tea producers, the projects will help privatize a large government industrial estate by distributing it to 4000 poor smallholders; 50% will go to women headed households. In due course, here again the new tea factory will be taken over by primary societies of smallholder tea producers.

With this project, IFAD will have financed ten projects in the Rwandese Republic, for a total loan amount of USD 98 million.

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IFAD is a specialized agency of the United Nations with the specific mandate of combating hunger and poverty in the most disadvantaged regions of the world. Since 1978 IFAD has financed 603 projects in 115 recipient countries and in the West Bank and Gaza for a total commitment of approximately USD 7.3 billion in loans and grants. Through these projects, about 250 million rural people have had a chance to move out of poverty. IFAD makes the greater part of its resources available to low-income countries on very favorable terms, with up to 40 years for repayment and including a grace period of up to ten years and a service charge of 0.75% per year.