Rwanda-based EAX now offers receipt financing

KIGALI, Rwanda - EAX, a commodity exchange company based in Kigali, is now providing warehouse receipts financing.

A warehouse receipt is a document that represents products that have been brought to a EAX certified warehouse. It represents the quantity, quality and terms and conditions of the products of which the receipt will be exchanged.

“EAX has started getting farmers in cooperatives to finance receipts and here farmers can go to banks and get loans with the receipt as a colloratel,” Kadri Alfah (below), the Country Manager EAX said in an interview with East African Business Week recently.

EAX wants to increase regional market efficiency and give the growing population, particularly small holder farmers, better access to commercial markets.

Alfah said, “With this new credit facility, farmers will get the working capital they need to sustain their business activities in between each harvesting season as well as give them greater purchasing power for seeds, fertilizers, equipment and other inputs.”

According to Alfah, currently the amount of lending that banks provide to the agricultural industry is less than 10% of the banks’ total lending. Yet the industry contributes over 37% to GDP with over 70% of the country’s population employed in it.

“This is an industry that is seriously in need of funding,” Alfah said.

He said, “Banks however have decided not to fund the industry because of the many risks involved in it, such as the climatic changing conditions, markets that is out-structured, the storage losses, which makes recovering loans not easy.”

“EAX system however has come in to resolve this problem. EAX warehouse receipt secures the commodity and that reduces substantially the risks of the bank and so the banks have the confidence to lend,” Alfah said.

From the borrower’s point of view, the warehouse receipt requires that they only use the grains as the solo colloratel to get the loan and therefore they do not need any other colloratel to access loans.

EAX has signed agreements with four banks, includings ECO-Bank, GT Bank, Urwego Opportunity Bank and Bank Populaire du Rwanda.

By Agnes Bateta, Sunday, May 10th, 2015


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