Introduction to Financial Management

Agriculture remains the main economic activity and employs the majority of the people in most low-income countries. Globally, there are approximately 450 million households whose main activity is agriculture. Agricultural producers in developing countries, particularly those in low-income countries including Rwanda, face a number of hurdles including low productivity, limited access to markets for their products, lack of adequate risk management products and services and limited access to finance.

While agriculture remains a key economic activity in Africa employing about 55% of the population, only approximately 1% of bank lending goes to the agricultural sector. Furthermore, only 4.7% of adults in rural areas in developing countries globally have a loan from a formal financial institution and only 5.9% a bank account, according to Findex data.

Access to financial services, while not a means to an end, is critical to provide funds for farm investments in productivity, improve post-harvest practices, smooth household cash flow, enable better access to markets and promote better management of risks. Access to finance can also play an important role in climate adaptation and increase the resilience of agriculture to climate change, thus contributing to longer-term food security.

In view of the above phenomena, financial management skills are consequently key for smallholder farmers especially within the Commercial Zones set up to ensure effective economic growth and sustainability.  With financial management knowledge, Commercial Zones are able to develop financial management skills as they learn the value of accountability and take full responsibility for their finances.

This module therefore intends to attain the following objectives:

• To empower smallholder farmers with knowledge on importance of saving, how to save and invest finances
• To facilitate the smallholder farmers to track the financial performance of their enterprises and produce proper records to present to financing institutions
• To inculcate in the smallholder farmers, the value of transparency and accountability while handling group finances within the commercial zones