RWANDA – The UN’s International Fund for Agricultural Development (IFAD) and the Government of Rwanda have initiated the second phase of the Rwanda Dairy Development Project (RDDP), pooling resources amounting to Rwf166.5 billion (approximately US$100.37 million).
RDDP phase II is funded by various contributors, including US$20.5 million from IFAD, US$17.64 million from the Government of Rwanda, US$20 million from the OPEC Fund, US$8.5 million from the Green Climate Fund (GCF), US$10 million from Equity Bank Rwanda, US$6 million from Heifer International, and US$9.52 million from project participants.
This new phase is set to benefit over 175,000 smallholder dairy farmers across 27 districts, expanding the project to include 13 additional districts and building on the success of the first phase, which concluded two months ago.
The project aims to enhance sustainable practices along the dairy value chain, increasing productivity, improving market access, boosting nutrition, and reducing poverty among rural households in Rwanda over the next six years.
“IFAD is pleased to expand our investment in the dairy sector following a successful phase one of the project,” said Dagmawi Habte-Selassie, IFAD Country Director for Rwanda. “The new phase will focus on improving value chain efficiencies by leveraging digitization and private sector financing to transform food systems, improve incomes, and enhance the nutrition of Rwandans.”
Rwanda’s dairy sector has seen substantial growth, with milk production increasing ninefold, transforming the country from a milk importer to self-sufficiency.
As production has increased, per capita milk consumption has risen from 20 liters in 2006 to 75 liters annually in 2021, improving children’s nutritional status. The second phase of RDDP aims to further increase annual milk production, which reached one billion liters in 2023.
The project will promote zero-grazing practices and encourage the replacement of local cattle breeds with improved breeds to enhance milk yield while reducing the need for large herds.
To support increased production, the project will help farmers establish mixed pastures, improve access to water through household-level water harvesting, and bring extension services closer to farmers.
Additionally, RDDP II will work to strengthen the capacity of small-scale farmers to transport milk to collection centers efficiently and enhance the capabilities of dairy cooperatives in managing these centers.
The project will also promote the use of renewable energy to power milk storage facilities, reducing energy costs, and support local small-scale milk processing to lower market linkage costs. Digitization of the value chain will enable better tracking of milk from production to market.
Over the next six years, the project plans to construct or rehabilitate 164 milk storage and processing facilities and equip 95 milk collection centers with a digitalized milk transaction management system.
Alice Ikirezi, Head of Investment and Social Impact at Equity Bank emphasized the importance of understanding the dairy sector’s unique needs.
“We realized that farmers struggle to afford an 18 percent market interest rate, so we lowered rates to make them more accessible. Financial institutions must structure loans that meet farmers’ needs,” Ikirezi stated.
While 24 rural districts will focus on increasing dairy productivity, districts in the City of Kigali will concentrate on value addition and dairy product processing.
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