IFC Leasing Program Helps Rwandan Coffee Farmers

The humble bicycle is helping boost the income and better the lives of 1,200 coffee farmers in Rwanda, thanks in part to IFC's leasing program in the country.

Coffee is a major source of export income in Rwanda, a country that is still recovering from genocide and the resulting turmoil of the 1990s. Most of the country's 10 million people work in the agriculture industry or toil at their own small farms to survive. IFC, in partnership with a local subsidiary of an international nongovernmental organization, is expanding a program that allows local coffee farmers to lease durable, eight-gear bicycles with a specially fitted shelf to haul heavy loads.

Working with Local Partners

A program to lease custom-made bicycles to coffee farmers was initiated by USAID and Spread, a civil society organization. It has made a dramatic impact on an industry that still relies on strength, sweat, and stamina. IFC has teamed up with Vision Finance, the financial arm of World Vision International, to help expand and commercialize the program in Rwanda, allowing local coffee farmers to lease bicycles that can carry about four times as much as the strongest farmers can move on their backs. This enables farmers to bring their harvest to distant washing stations much faster, meaning the beans will be fresher and obtain a higher price at market.

Issac Murenzi, a married father of four children, is a coffee farmer from Rwanda's southern Gitarama Province. He knows the hard work involved in hauling heavy bags of freshly picked coffee beans—some weighing up to 50 kilograms. "The coffee bike has changed my life," Murenzi said. "It allows us farmers to transport our coffee on the same day, improving the quality of coffee we deliver. This in turn has helped increase our earnings, since we have been able to meet the demands of the market both in quality and quantity."

Some 1,200 farmers are now using the bicycles, which they purchase for about $140 through a lease-to-own program that was designed largely by IFC. Payments are made over the course of a year, ensuring that the cost does not bite deeply into the farmers' monthly income.

Leasing Benefits Smaller Businesses, Individuals

Leasing is an excellent business model for individuals or small and medium enterprises in developing countries, where high interest rates and difficulty obtaining loans often rule out cash purchases of goods and equipment. But smaller businesses that could benefit most from a clearly regulated and reliable leasing industry have often been stymied by the challenge of introducing a comprehensive leasing framework at the national level. Risk-averse banks have been equally hesitant about introducing programs for smaller businesses or recognizing the benefits of leasing.

IFC launched a leasing program in Rwanda in 2006. In a short time, we have helped the country introduce a legal framework for leasing, guided banks through the process of developing leasing products, and raised awareness among businesspeople about the advantages of leasing equipment to expand production and profitability. Through its advisory services program, IFC has also provided the necessary legal and technical knowledge for Rwandan banks and other financial institutions—including Vision Finance—to begin leasing programs.

Bringing Proven Models to Africa

IFC has had much success in developing leasing programs in Russia, Ukraine, and Central Asia, and we are excited about bringing these models to Africa.

"IFC is a pioneer in introducing leasing programs to post-conflict countries like Rwanda," said Thierry Tanoh, IFC Director for Sub-Saharan Africa. He noted that leasing helps businesses grow by giving them the chance to introduce vehicles or equipment that would otherwise be too expensive to buy. This ultimately benefits the economy by boosting employment and increasing the tax base.

IFC is also developing specific leasing models in Cameroon, the Democratic Republic of Congo, Ghana, Madagascar, Senegal, and Tanzania—all countries where legal frameworks for leasing are either rudimentary or nonexistent.

This year, the program in Rwanda plans to increase the number of bicycles it delivers to 2,000, as farmers are eager to get their own pair of wheels. The success of this program has piqued interest in Kenya and other countries, as the sturdy bike can be adapted easily for use across the agricultural industry—for example, hauling rice, potatoes, or milk.

For more information contact:

Daniel Musiitwa
IFC Communications Officer
Johannesburg, South Africa
Phone: +2711 731 3175
E-mail: dmusiitwa@ifc.org