Climate Resilience Through Microfinance: Insights from Rwanda

Research Topic: Smallholder farmers are highly sensitive to climate change impacts and often have limited means of recovering from or adapting to these. In Rwanda, microfinance products directed at farmers, available through farming or financial cooperatives, have mainly comprised of loans of seed and fertiliser, aimed at increasing yield but not specifically at increasing climate resilience. This project investigated farmers’ experiences with climate change and mitigation; vulnerabilities and exclusions; reverberations of rural climate change impacts in the urban areas of Kigali; opportunities for microfinance institutions (MFIs) to support climate adaptation beyond current products, and possibilities for widening access to climate-resilient solutions through financial inclusion for lower income and more vulnerable groups.

Methods: Interviews (n=30), surveys (n=270), participatory mapping (n=3) and transect walks (n=3) were conducted with smallholder farmers (n=30) in three rural districts of Rwanda: Gisagara, Musanze and Ngoma. Participants were selected through initial contacts identified by Urwego Bank, the local MFI partner of Opportunity International, who funded this research project. Additional interviews were held with agricultural loans officers. Furthermore, 10 interviews were conducted with traders in agricultural produce in Kigali district. Finally, e-interviews (n=11) were held with stakeholders working in the field of financial inclusion, agriculture, development and climate change in Rwanda, to consider the way forward for microfinance as a tool for climate adaptation. The three rural districts comprise a range of climate vulnerabilities, in terms of the population’s income and age, infrastructure, agricultural sensitivity, and weather patterns.