Rwanda: $100m Irrigation Schemes Face Financing Setback

IN 2018, Rwanda and the Export-Import Bank of India signed a loan agreement of $100 million (about Rwf100 billion at the current exchange rates) to develop three irrigation schemes - Warufu, Nyamukana and Mugesera.

The Warufu irrigation site is located in Gatsibo District, Nyamukana in Nyanza District and Mugesera in Ngoma District.

Aimed at tackling drought and revive the declining fortunes of farmers stemming from drought, the project targeted to irrigate some 6,000 hectares of land.

It would boost farmers' incomes and help address food shortages among some residents.

According to Rwanda Agriculture Board (RAB), the project is supposed to be complete in four years.

Moreover, three years have elapsed since the signing of the loan agreement, yet the project implementation has not yet started.

What went wrong?

Information from RAB indicates that while Warufu and Nyamukana irrigations schemes have feasibility studies, for Mugesera no study was conducted, hence the project could not commence.

Nyamukana and Warufu were ready for implementation but, after a review, it was found out that the conditions for the line of credit were stringent.

The Bank demanded 75 per cent of goods and services associated with the projects must be sourced from India.

Patrick Karangwa, the Director General of RAB, told The New Times that this was a major obstacle for them.

"Unless stones and sand were to be imported from India, the condition was not to be fulfilled," he said, suggesting that it was not possible to import such materials from India into Rwanda.

Way forward for the project

Going forward, RAB says Rweru irrigation scheme in Bugesera District has been proposed to India Exim Bank for funding, replacing Warufu and Nyamukana irrigation schemes.

The proposal is pending approval from the Indian lender.

"We requested that the 75 per cent requirement be relaxed to 65 per cent for the new proposed site (Rweru)," Karangwa said.

Mugesera targets 3,500 hectares, while Rweru targets 3,000 hectares, according to Robert Ndabavunnye, the Irrigation Specialist at RAB.

Ndabavunnye said that initially, Mugesera was to irrigate 1,000 hectares, but was upgraded to 3,500 hectares following a review.

Irrigation, he said, is expected to benefit a combined 6000 farmers in Bugesera and Ngoma districts.

"The project will boost agriculture production by enabling farmers to cultivate three seasons a year with high value crops," he said.

Ndabavunnye said that the Rweru site will start immediately after approval from Indian.

Regarding Mugesera irrigation scheme, Ndabavunnye said feasibilities studies will be complete by December this year and the project is slated to commence in July 2022.

Ndabavunnye said that for Rweru, there is a need to build pumping systems to pump water from Rweru Lake into the farms for irrigation, adding that water pipes will also be necessary.

The same, he said, applies to Mugesera where water will be pumped from Lake Mugesera.

"They [Indians] produce pipes and water pumping machinery. Those can be imported from India," he said.

For civil works which involve construction with cement, sand and gravels, he said, they should be sourced locally, adding that Warufu and Nyamukana need a simple irrigation technology such that importing even 65 per cent of goods and services from India is not realistic.

Looking for another financier for Warufu and Nyamukana

Karangwa said that for the Warufu and Nyamukana schemes, even though the condition was relaxed to 65 per cent, it could not be possible to meet it as they do not require technology that would need importing goods and services amounting to that from India.

However, he said that the Government did not abandon these two schemes, rather it decided to look for another financier [China Exim Bank] with 'realistic' funding requirements.

"We are negotiating with Chinese so that we can get a loan [with favourable conditions] to finance them," he said, indicating that talks have reached an advanced stage.

Overall, over 60,000 ha are irrigated in Rwanda - out of the country's 1.5 million hectares of arable land. Plans are underway to increase the irrigated farm area to over 102,000 ha by 2024.


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