How e-tractors will impact Rwanda's agricultural sector

In the second quarter of 2024, Rwanda's agricultural sector has contributed about 25 per cent to the GDP. With the introduction of electric tractors to farming techniques, the sector is poised to perform exponentially. CNBC Africa's Sandrine Umutoniwase spoke with Serge Kamuhinda, CEO of Volkswagen Rwanda on the various impacts of this initiative. Volkswagen Rwanda has launched an innovative initiative in Gashora, Rwanda, known as GenFarm, introducing electric tractors to revolutionize farming techniques. The project incorporates charging stations that double as empowerment hubs, providing post-harvest storage facilities and access to shops for farmers. These tractors harness solar power to offer energy, addressing the challenge of energy scarcity in rural areas while also offering mechanization to African farmers. Serge Kamuhinda, the CEO of Volkswagen Rwanda, highlighted the importance of this initiative as a future driver of rural development. The project's pilot phase is taking place in Gashora, under an MOU with the government of Rwanda. If successful, Volkswagen hopes to replicate this model across different parts of Africa. One of the key advantages of these electric tractors is their affordability and innovative financial models. The tractors were developed from scratch, aiming to be more cost-effective in operations compared to conventional tractors. Farmers can hire these tractors as a service through cooperatives, reducing the upfront costs. Additionally, the tractors feature swappable batteries, allowing for cheaper pricing and innovative ownership models, similar to successful models seen in the motorcycle industry. The financial impact of introducing electric tractors in Rwanda and potentially across Africa is significant. Drawing comparisons to the Indian market, Kamuhinda noted the vast untapped potential in Africa for tractor sales. While India sells around 740,000 tractors annually, Africa only sells approximately 470,000 tractors. This points to a substantial market opportunity for Volkswagen and other manufacturers in the agricultural sector. Kamuhinda emphasized that the transition from rural to urban-based economies in Africa presents a unique opportunity for the growth of mechanized agriculture. The eastern province of Rwanda is particularly suitable for mechanization due to its flat terrain, with opportunities for expansion to other regions of the country and beyond. Addressing the skepticism surrounding previous tractor projects in Africa, Kamuhinda highlighted the importance of designing fit-for-purpose tractors tailored to African soil conditions and specific use cases. The reliance on solar power as an energy source also mitigates the issue of fuel scarcity in remote areas, making the GenFarm initiative a sustainable and practical solution for the agricultural sector. As Volkswagen Rwanda continues to drive innovation in the agricultural industry with its GenFarm initiative, the future looks promising for the transformation of farming techniques and rural development across Africa.