Investment Components
Component 2: Rural Economic Transformation
The second component, representing approximately
USD 13.5 million of Programme investment, comprises three
sub-components: (i) Production/Market Support for Agricultural,
Livestock and Forestry Development; (ii) Rural Enterprise
Development; and (iii) Rural Financial Services.
Sub- Component 2-a: Support
for Agricultural, Livestock and Forest Development (USD 8.8
million)
A number of principles have guided the redesign
of the original project component, ‘On-farm Development
Support’.
• Focus on association/group development
to create necessary ‘critical mass’ of trained
and capacitated community-based organizations.
• Adoption of a more market-oriented, commercial approach
to farming/livestock rearing – and to the provision
of technical services – that starts with what can be
profitably grown/raised and marketed.
• Utilization of commodity chain analysis (‘approche
filière’) to allow for more effective targeting
of technical and financial support in response to identified
constraints and opportunities.
The sub-component comprises four elements:
(i) market-oriented technical support services, (ii) support
for group enterprises and market-based initiatives, (iii)
livestock production and commercialisation and (iv) forest
management.
Market-Oriented Technical Support
Services. These services combine extension, demonstration
and client-responsive adaptive research and builds on the
experience gained during the first phase The principles applied
then are relevant now and are in line with national policy
and focus on the development of an extension service with
minimal government involvement and use of farmers’ own
resources, capacity and opportunities to tackle constraints
identified through PRAs and commodity chain analysis. It will
involve deepening the partnership between ISAR/DALF and the
Programme with the two organizations building on the experience
gained in the first phase but with greater demonstrated accountable
for performance and impact of the activities undertaken on
behalf of the Programme.
The basis for extension and demonstrations
will be the formation and training of some 80 extension groups,
one in each sector. The members will be selected by their
communities, based on their farming skills and capacity, in
such a way that all groups are represented and that there
is a gender and age group balance. The focus will be on: (i)
commodity chain analysis, (ii) demonstrations of improved
technologies; (iii) organisational and technical empowerment
of the farming community; (iv) follow-up PRAs and performance
evaluation workshops; and (iv) strengthening the capacity
DALF and ISAR.
Support for Group Enterprises and
Market-based Initiatives. This second activity responds
to the need to assist farmers to form enterprise groups to
facilitate purchase of inputs and market of their production.
The programme will focus the establishment of small-scale
group businesses. To facilitate this, a financing facility
would be created to fund a number of activities to support
the development of group initiatives.
Livestock Production and Commercialisation.
The third activity will be used to promote: (i) Support for
Development of Livestock Owners Associations (LOAs), (ii)
Strengthening the Milk Commodity Chain and (iii) Animal Heath
Initiatives. All three will be private sector based and market
oriented.
The Programme would form and train LOAs as
the focus for Programme interventions in the livestock sector.
By creating well trained and informed business-oriented groups,
it will be possible for the livestock owners to better access
technology, business opportunities and financial services.
The initial LOAs would be formed around a specific activity
or business development opportunity – such as a milk
collection centre – that would provide a clear direction
and motivation for the livestock owners to work together.
Programme initiatives in support of the milk
commodity chain during the second phase are:
• Milk Collection Centres. A series
of milk collection centres will be financed with the exact
number will be conditional on negotiations with PADEBL –
a national AfDB-financed livestock development project that
also includes funding for milk collection centres.
• Nyagatare Milk Processing Plant. Including the cost
of financing the rehabilitation and equipping of the plant
under the second phase of UCRIDP.
• Improvement of fodder resources. Establishment of
demonstration plots by ISAR/DALF adjacent to the milk collection
centres.
• Improvement of Local Breed Productivity. to contribute
to the quantity of milk available and to the return to the
farmers/livestock owners supplying the milk.
With experience from the first phase, the
Programme will expand the programme of animal health initiatives
to other districts and over the four years increase the number
of community animal health agents trained and made operational
by 120 to 160. Complementary initiatives include: veterinary
drugs and outbreak emergency revolving funds, control of tsetse
fly animal diagnostic and crush pens.
Forest Management. Support
for forest management is divided into three main investment
activities:
• District Forest Plantations, involving
the establishment of some 3 200 ha in four years.
• Social Forestry, involving some 2 400 ha of households’
plantations.
• Fruit Tree Orchards, on some 3 000 ha of farmland.
• Training and Institutional Support, which includes:
support to ISAR and DALF for studies and training and backstopping.
Sub- Component 2-b: Rural
Enterprise Development (USD 1.8 million).
The implementation of the sub-component will
be carried out in conjunction with PPPMER, a national IFAD-financed
project to support the promotion of small and micro enterprise
development. UCRIDP would provide the funding, the oversight
and would ensure coordination with other Programme components.
PPPMER would provide day-to-day management of enterprise development
activities in line with the approach used and modalities of
project implementation in the other areas of the country.
The sub-component comprises four main activities:
(i) promotion and support for rural enterprise development;
(ii) support for rural small and micro entrepreneurs; (iii)
access to financial services; and (iv) management support.
Promotion and Support for Rural
Enterprise Development. Support will be provided
to promote a favourable environment for SME development, including:
(i) functional literacy training, (ii) gender-focused analysis
and initiatives; (iii) strengthening of SME associations and
federations so that they can defend their members' interests,
negotiate with potential partners and ultimately take over
programme's responsibilities with regard to providing support
to their members; (iv) strengthening of solidarity groups
to facilitate access of the micro-enterprises to financial
services; and (v) capacity-building of district-based Rural
Enterprise Advisers.
Support for Rural Small And Micro
Entrepreneurs. The activities will include: (i) technical
and management training; (ii) apprenticeship programmes and
(iii) marketing support.
Access to Financial Services.
A line of credit will be created to fund: (i) small credit
(FRw 15 000 to 200 000) for individuals and solidarity groups;
(ii) ‘ordinary’ credit (FRw 150 000 to 1.5 million)
for the purchase of equipment, constitution of stocks, or
financing of revolving funds; and (iii) investment credit
(over FRw 1.5 million) for larger enterprises. Participating
financial institutions are expected to include: MFIs –
for small credit; Union des Banques Populaires du Rwanda (UBPR)
and major MFIs – for ‘ordinary’ credit;
and Banque Rwandaise de Developpement (BRD) and commercial
banks – for investment credit.
Management Support. This
will finance a centre/antenne for promotion of rural enterprise
activities in the province.
Sub- Component 2-c: Rural
Financial Services (USD 2.8 million).
The sub-component would have three main strategic
thrusts: (i) support to groups and individuals accessing rural
financial services; (ii) support for MFIs; (iii) provision
of a line of credit; and (iv) technical advisory services.
Support for Rural Groups to Access
Financial Services. The first activity, builds on
the success during the first phase in forming and training
community-level savings and credit groups. Support would be
extended to include the full range of target groups with which
the Programme is working. The sub-component will also work
with enterprise groups and other groupings of rural entrepreneurs
to help them organize themselves to qualify for access to
credit.
Support for MFIs. The Programme
would select a limited number of local MFIs with which to
work and would assist them to become viable/sustainable institutions.
The contracts given to the two MFIs in late 2003 – Duterimbere
and CSC Ugama – will provide a test case and allow the
PCU to determine if they would be suitable candidates for
inclusion in the rural finance support programme during the
second phase. In addition to the direct support for MFIs,
the programme would provide technical assistance to the Rural
Microfinance Forum to contribute to the reinforcement of its
capacities, particularly with regard to the provision of advisory
services and training to MFIs and the production of manuals
and other methodological tools.
Line of Credit. The Programme
would include a refinancing facility that could be accessed
by a range of different financing institutions, through:
• Credit Facility. These funds will
be available to MFIs contracted by UCRIDP.
• SME Credit Line. The SME credit line provided for
in the twin project will be maintained to finance medium-term
loans for small and medium entrepreneurs willing to invest
in the province.
Technical Advisory Services.
The allocation included in the twin project to finance technical
advisory services will be maintained. It would be used to
hire international and national consultants to: (i) assess
the lending market in the province; (ii) design the conditions
of utilisation of the credit line; (iii) assess the functioning
and impact of the credit line after two years of operation;
(iv) study extended modalities for the operation of the credit
line; and (iv) provide other advisory services to BRD in connection
with the operation of the credit line. Included under this
initiative would be support for setting up a Microfinance
Platform to bring together rural finance stakeholders to promote
networking, exchanging information, solving problems and developing
innovative solutions.
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