Rationale: Ghana Agricultural Sector Investment Programme (GASIP)

1. The Ghana Agricultural Sector Investment Programme (GASIP) aims at providing a framework and institutional basis for a long-term engagement and supplementary financing for scaling up investments in private sector-led pro-poor agricultural value chain development. GASIP will contribute to the realization of Ghana’s Medium Term Agriculture Sector Investment Programme (METASIP), which provides the road map for the CAADP compact in Ghana. The Ministry of Food and Agriculture (MOFA) will implement GASIP with the aim to promote a “standard setting approach” that will drive its policy, serve as a core investment for value chain development in Ghana, and for aligning parallel financing to complement, following the modalities that each of the Development Partners (DP) prefer. In line with the agreed Strategic Framework for IFAD in Ghana (2012 COSOP), GASIP is built along four (4) strategic axis: (i) linking smallholder farmers to agribusinesses to enhance pro-poor growth;

2. nationwide scaling up of a successful value chain investment approach; (iii) promoting and mainstreaming climate change resilience approaches in Ghana, in particular in the northern regions, financed through the Adaptation for Smallholder Agriculture Programme (ASAP); and (iv) knowledge management, harmonization of intervention approaches and policy support.

3. GASIP is designed as a long-term Programme that will be implemented in cycles of three years each. This initial design covers the first two cycles or six years, with significant core financing earmarked by IFAD. Prior to the end of each cycle, an Inter-cycle Review Mission (IRM) will be organized to assess progress, prepare the next cycle and justify new funding. This approach will allow institutionalizing permanent learning in the programme concept.

4. MOFA has invited all Development Partners and interested parties to a stakeholder process towards making GASIP a sector wide approach. In order to avoid the classic weaknesses of past SWAPs (rigid mechanism, lack of focus and broad visible impact, long start-up phase), it was decided to use the achievements of NRGP and RTIMP as starting point, and to use the first cycle of GASIP to develop tools for a flexible sector wide approach. In order to allow other stakeholders stepping in or align to this sector approach, GASIP will work during the first cycle on: (a) the harmonization of value chain development tools, including climate change vulnerability analysis; (b) the institutionalization of a mechanism to finance value chain infrastructure at District level, in line with decentralization; (c) the institutionalization of a matching grant mechanism to leverage investments in equipment, (d) the set¬up of an initiative fund to support innovations in value chains.

5. This report provides reference to the initial financing earmarked by IFAD. Within a flexible approach, additional co-financing will serve to (i) deepen and enhance the impact on the targeted population; (ii) increase outreach of the programme to additional clients; and (iii) widen the scope of GASIP to achieve the METASIP objectives.

6. Intervention Area, Value Chains and Target Group

7. GASIP will be national in scope and governed by a demand and market-driven approach. Districts, FBOs, businesses and individuals will have access to Programme benefits based on their eligibility for support coupled with opportunities for viable value chain ventures. GASIP will make resources available for value chain development in 160 districts by the end of the first cycle (PY3), and in at least 180 districts by the end of the second cycle (PY6).

8. Selected value chains for initial support, for which evidence is provided by on-going projects, may include (a) cassava; (b) maize; (c) sorghum; (d) yam; (e) fruits and vegetables. GASIP will also start working on conservation agriculture in northern Ghana, using a maize-sorghum-cowpea/soybean rotation. Additional value chains would be selected and taken on board based on following criteria:

9. evidence of increased financial return for smallholders, in particular youth and women; (ii) proven tools that link smallholders into commercial value chains; (iii) proposals from agribusinesses and Value Chain Committees (VCCs); and (iv) potential for climate change adaptation.

10. GASIP will target smallholder farmers and resource-poor rural people, in particular women, youth (15-24 years) and young adults (25-34 years). ASAP will sub-target households, which are vulnerable to shocks induced by climate change, particularly in the three northern regions.

11. Programme Development Objective

12. The overall goal of GASIP is to contribute to sustainable poverty reduction in rural Ghana. The Programme Development Objective (PDO) is: “agribusinesses, including smallholders, have enhanced their profitability and climate change resilience”.

13. Outcomes and Components

Component 1: Value Chain Development

1. Subcomponent 1.1 (Agribusiness Linkages Development) aims at formalizing agribusiness agreements with smallholders farmers, allowing them to reliably access factor and output markets. In order to achieve this, the Programme will support the selection and analysis of value chains, facilitation support, Value Chain Committees (VCCs), technical and institutional capacity building of Farmer Based Organizations (FBOs) and other stakeholders, and innovation mainstreaming.

2. Subcomponent 1.2 (Value Chain Financing) aims at ensuring increased and systematic access to and use of short and long term financing for value chain businesses. GASIP will: (i) in collaboration other projects, provide capacity building Rural and Community Banks (RCBs) to improve performance in liquidity management, delinquency management, structured trade finance and savings mobilization;

3. support universal banks in strategic and operational development for structured trade finance;

4. promote equity style investments in value chain enterprises including finance leasing and venture capital; (iv) promote equity development in RCBs through direct investment and linkage with larger banks; and (v) through grant mechanisms match high potential, weakly capitalized value chain actors’ equity to leverage finance for investments in equipment and infrastructure.

5. Subcomponent 1.3 (Climate Change Resilience) aims at mainstreaming climate change resilience across the selected agricultural value chains through a broad promotion of technologies proven elsewhere. GASIP will focus on three domains. Firstly, commercially valid adaptive trials and demonstrations of modern conservation agriculture techniques under rain fed conditions and in -situ rainwater conservation techniques will be undertaken. Secondly, demonstrations of efficient water-use techniques within new and existing irrigation systems will be undertaken. Thirdly, institutional capacity building and enhanced public awareness of private and public value chain actors in the field of climate change resilience will be supported. Initial funding will be provided through the Adaptation for Smallholder Agriculture Programme (ASAP). The demonstrated activities will thereafter be taken up under the financing from the IFAD resources and those of other future co-financiers.

Component 2: Enabling Rural Infrastructure
1. Subcomponent 2.1 (Productive Infrastructure and Facilities) aims to leverage investments in commercial infrastructure and facilities. These will be facilities, owned by a private sector player or a District Assembly, but operated by a private sector entity for the benefit of all value chain participants.

2. Subcomponent 2.2 (Enabling Public Infrastructure) aims to finance essential public infrastructure for the growth and viability of associated value chains. These are facilities completely operated and maintained by the public sector. Examples are access roads and farm tracks, rural electrification to enable pump irrigation and processing, small dams, water management and water harvesting schemes. Investment made in water harvesting and control infrastructure will be financed by ASAP initially and then scaled up as outlined in Subcomponent 1.3.

Component 3: Knowledge Management, Policy Support and Coordination
1. Subcomponent 3.1 (Knowledge Management, Harmonization and Policy Support) aims at creating an enabling environment for smallholders to participate in profitable and climate change resilient agricultural value chains. Subcomponent 3.2 (Coordination, Monitoring and Evaluation) will cover costs for coordination, management, and monitoring and evaluation (M&E).

2. Implementation Arrangements

3. MOFA will have overall responsibility for the implementation of GASIP. A National Programme Steering Committee (NPSC) will orient programme strategy, oversee planning, review progress and ensure linkages with related entities. The Programme Coordination Unit (PCU) will be based in Accra and ensure overall coordination of the Programme, implementation of Subcomponent 3.1, support supervision, Inter-cycle Review and evaluation missions, consolidation of the Annual Work Programme and Budget (AWPB) and progress reports, fiduciary and procurement oversight, and promotion of transversal themes. The MOFA shall establish three Zonal Programme Offices (ZPO), to provide day to day coordination of Programme activities. The ZPO shall work in close collaboration with the Regional Agriculture Development Units (RADUs). The existing Programme Management Unit of the IFAD co-financed Northern Rural Growth Programme (NRGP) located in Tamale shall be strengthened to coordinate the activities of the Programme in Northern Ghana until the completion of the NRGP. At that time it shall become the Northern ZPO (ZPON) of the Programme. A ZPO Central (ZPOC) shall be established in Kumasi, and a ZPO South (ZPOS) shall be established in Dodowa.

4. The core function of PCU and ZPOs will be coordination, while specialized services will be largely outsourced to value chain facilitators, public services, specialized technical service providers and PFIs on the basis of performance-based contracts. In line with decentralization, coordination will gradually be mainstreamed into the regional and district structures during the second cycle, on the basis of recommendations made by the IRM.

Cost and Financing
Basic programme costs over 6 years, including contingencies, taxes and duties, are estimated at US$ 113.0 million or the equivalent of GHS 297.9 million. A total of US$ 71.6 million of IFAD funding will be mobilized for the first 6 years (2 cycles). GASIP will absorb the entire PBAS allocation of US$ 36.6 million of the 2013-2015 PBAS allocation for Ghana under concessional lending terms, as well as US$ 10 million ASAP grant funding for climate change adaptation activities. Subject to availability and implementation performance, additional financing of US$ 35 million will be earmarked from the 2016-2018 PBAS cycle. GoG will finance taxes and duties on imported goods, and Value Added Tax (VAT) for a total amount of US$ 7.6 million. The PFIs are expected to provide credit of at least US$ 17.5 million. Contribution in cash or kind of beneficiaries is estimated at US$ 4.6 million, that of the District Assemblies at US$ 1.7 million.

7. Co-financing opportunities will be explored by GoG and the IFAD country office (ICO) during the pre-project phase and the first cycle. These resources will mainly be used to (i) top-up Component 2 (rural roads, rural electrification, commercial infrastructure and facilities); (ii) top-up the budget lines for matching grants to leverage private sector investments in equipment for production and processing; (iii) increase the number of targeted value chains, in particular in the livestock and fisheries sector; (iv) related institutional strengthening of MOFA at national and District level.

Small Grant

A small country grant of US$ 500,000 was proposed to pilot activities during 2014.

Benefits and Impact
GASIP is expected to directly benefit at least 62,900 farmers by PY3 and 86,400 farmers by PY6. At grassroots level, 4,000 FBOs would be involved in implementation and receive support to integrate in formalized value chains and are more climate change resilient. Most FBOs would be linked to domestic and export markets, agro-industries, input suppliers and at least 150 PFIs or their branches. These linkages would be established through 200 agribusiness arrangements. Total outreach is estimated at 514,000 people.

Source: IFAD Project Document on GASIP

Leave a Reply

Your email address will not be published. Required fields are marked *