The agreement covers a loan of 344.5 million Chinese yuan, equivalent to more than $48 million. It was signed in Kigali on August 21, 2025.
The loan will be repaid over a period of 13.5 years, with a grace period of six and a half years before repayments begin. It carries an annual interest rate of 2 per cent.
The project will be implemented in Gisagara District, Southern Province, and is aimed at strengthening agricultural productivity while enhancing resilience to climate change.
Presenting the agreement to Parliament, Minister of Finance and Economic Planning Yusuf Murangwa said the project seeks to address climate-related challenges affecting agriculture.
'The objective of this project is to strengthen agricultural capacity and productivity and mitigate the effects of climate change by irrigating 2,640 hectares of land and promoting water harvesting and efficient water-use technologies in Giseke,' Murangwa said.
He added that the project would support long-term economic transformation through major infrastructure works, including the construction of an irrigation dam and associated water distribution networks.
According to the minister, the project will enable farmers to transition from rain-fed agriculture to irrigation-based farming, allowing year-round cultivation and increased yields.
'This will allow farmers to farm throughout the year, improve productivity and expand profitable agricultural practices,' he said.
During the parliamentary debate, some MPs sought clarification on aspects of the agreement. MP Bizimana Minani asked whether the partnership terms had been adequately reviewed and whether the cooperation framework with Exim Bank of China provided sufficient assurances.
MP Germaine Mukabalisa drew attention to provisions indicating that equipment and technology for the project would be procured from China where possible.
'Experience has shown that such conditions can sometimes delay projects. In some cases, the required technologies are available locally, within the region or elsewhere at a lower cost. What happens if the lender insists on procurement from China even when it is more expensive?' she asked.
MP Furaha Rubagumya also raised concerns over clauses stating that technical standards for project implementation should be equivalent to those used in China, noting that local conditions differ.
Responding to the concerns, Minister Murangwa said Rwanda's cooperation with Exim Bank of China remains strong, citing ongoing collaboration on various projects.
He explained that procurement conditions requiring purchases from the lender's country are standard practice for concessional loans.
'When a country receives a highly concessional loan like this one, with a six-year grace period, a two-year implementation timeframe and a low interest rate of 2 per cent, it is common for lenders to require that equipment be sourced from their country,' Murangwa said.
He added that the agreement does not impose fixed quotas on procurement from China and that Rwanda remains confident it will secure value for money.
'We are confident that the country will not overpay,' he said.
Murangwa also noted that aligning technical standards with those applied in China would ensure international-quality outcomes, adding that independent, non-Chinese inspectors would be engaged to verify compliance and quality.
The irrigation programme is expected to begin no later than 2028.
IGIHE
