Government mitigates risks of agriculture-based lenders

George Oduro, Ghana’s Deputy Minister of Food and Agriculture_Agricinghana

The government is designing a new lending mechanism that will help increase finance to lending institutions for uplending to agricultural-based businesses, a Deputy Minister of Food and Agriculture, Mr George Oduro, has said.

Known as the ‘Ghana Incentive Based Risk Sharing Agricultural Lending’ (GIBRSAL), the scheme will, among other things provide guaranteed financing and also provide advisory services to banks and other financial institutions lending to businesses in the agricultural sector.

The object is to help reduce the risk associated with lending to such businesses, the deputy minister said at the fourth Annual Agribusiness Investment Summit in Accra.

The summit was under the auspices of the United States Agency for International Development Financing Ghanaian Agriculture Project (USAID-FinGAP) through the US government’s ‘Feed the Future’ initiative.

The benefits

On the fruits of the GIBRSAL, Mr Oduro said the government expected the risk sharing lending to combine with other initiatives to help increase investments in the sector.

“The intervention, coupled with the government’s commitment to increase infrastructure such as roads, irrigation schemes, warehousing and energy for processing, will catalyse and accelerate private sector investment in the agricultural sector,” he said.

He said agriculture continued to be an important sector of the economy that holds the key to the economic transformation the country so desires.

However, he said finance to the sector had always been a challenge due to risk associated with issues such as dependence on rainfall, low productivity, price instability, high post-harvest loses and low value addition to farmers.

This, he said,explained the government’s decision to step up efforts at modernising the agriculture sector through the Planting for Food and Jobs initiative.

“It is a clarion call to all to support this programme because its objectives require support from all, especially the private sector for the financial support required for investment,” he said.

The agribusiness investment summit

Its major aim was to showcase the investment opportunities in the maize, rice and soy (MRS) value chains and link them with small, medium including large enterprises (SMiLEs) to financing to improve food security and stimulate economic growth.

Over 400 stakeholders including local and international investors, agribusinesses, farmers and farmer-based organisations, development agencies, government and non-governmental organisations, attended the summit on the theme, ‘Mobilising Strategic Investment for Agriculture.’

USAID-FinGAP impact

This year’s summit highlighted the impact of USAID FinGAP’s work on increasing access to finance for agribusinesses and smallholder farmers within a five-year period -July 2013-July 2018.

The Chief of Party of the USAID-FinGAP, Mr Rick Dvorin, said the project had facilitated the disbursement of US$117 million to over 1,700 SMiLEs.

It also benefited over 111,000 smallholder farmers in the last three-and-half-years in the MRS value chains.

He said 19 business advisory service providers had also facilitated the disbursement of over US$33 million in financing disbursement to SMiLEs.

“An impact assessment revealed that average expenditure on hired labour increased by 46 per cent between 2013-2016.”

“Thirty per cent of increased earnings by SMiLEs were invested in the education of their children leading to a reduction of dropout rate and 11 per cent on household itself, which led to access to potable water,” he said.

The Chargế d’Affaires at the US Embassy, Ms Melinda Tabler-Stone said the US government was committed to working with the government of Ghana to boost economic growth and reduce poverty. GB

“We share in the growth of a strong Ghana with citizens who can fully participate in the global economy,” she said.

Article Source Credit: Ama Amankwah Baafi, Daily Graphic

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