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Gov’t, AGRA plan new agricultural financing mechanism

June 22, 2016, 2:39 p.m.

In an effort to find a lasting solution to the perennial agricultural funding challenge that has stalled development of the sector, the Alliance for a Green Revolution Africa (AGRA) NGO in collaboration with the Ghana government is developing an all-inclusive agricultural financing mechanism to that effect.

Ghana’s agricultural sector is seriously under-resourced, particularly smallholder farmers who are being starved of the needed financial resources to purchase necessary inputs. Banks and other financial institutions have ‘blacklisted’ the sector as a highly risky venture, hence their hesitation to advance loans to its players. The situation is a major factor in the declining fortunes of the sector.

The Country Head of AGRA, Dr. Kwasi Ampofo said the agricultural financial model, dubbed the ‘Ghana Incentive-Based Risk-Sharing Agricultural Lending System’, is currently in the developing stage. The system, he noted, will provide an effective framework for the Bank of Ghana to collaborate with commercial banks to lend at competitive interest rates to players in the agricultural value-chain, adding: “A technical team is working with the Bank of Ghana, Finance Ministry, and Ministry of Food and Agriculture to engineer the mechanism”.

He said AGRA has worked with the Nigerian government to develop a similar mechanism that has been very instrumental to development of the agricultural sector in that country, hence the need to replicate it in Ghana.

Dr. Ampofo announced this in Sunyani during a maize value chain stakeholders’ meeting. It was primarily designed for information-sharing on the Development of Market Access and Post-harvest Service (DMAPS), a multi-stakeholder project aimed at enhancing access to markets by over 10,000 smallholder maize farmers in the Brong Ahafo Region.

The meeting was under the theme ‘Catalysing the potential of the maize sub-sector through effective smallholder farmers’ participation in the right markets’.

He stressed the need for government and other relevant agricultural stakeholders to create the needed enabling environment to increase maize yield. The current average maize yield in the country is estimated at 1.8 tonnes per hectare, but he pointed out that there is potential to accelerate maize yield to about 3.6 tonnes/hectare, saying: “AGRA has a maize project in the Volta Region and it is achieving 3.4 tonnes/hectare, and therefore if all put their shoulders to the wheel, it will be achieved”.

“The key drivers of agriculture are access to relevant information; access to high quality inputs; access to high-earned market structures; access to finance and enabling policy environment. It is important to prioritise these issues to boost growth of the sector,” he stated.

On her part, Country Director-Concern Universal Ghana - implementing partner of DMAPS - Juliette Lampoh said irrespective of the agriculture sector’s dwindling contribution to the economy, the sector remains very critical to development of the economy, especially in agric-driven areas like the Brong Ahafo Region where efforts must be made to improve it.

“Smallholder farmers are the heart of maize production and marketing; they must be key actors of achieving the needed change. It is a paradox that in one breath we speak of agriculture as an economic sector and at the same time in reality it is perceived largely as subsistence sector, particularly the staples.

“Subsistence does not grow economies, but rather effective trade; development and job-creation potential will remain a mirage if the majority of producers are left out of participating effectively in the market. But market participation cannot be effective in unstructured markets with no appreciation of standards and no incentive for quality. There is a need for urgent and significant change,” she said.

The Director of Agribusiness Unit-MoFA, Nicolas Neequaye, in a speech read for him alluded to the fact that in order for farmers to fully benefit from the available market opportunities, they [farmers] must be well-organised and abreast with various market requirements and produce commodities that are in demand, saying: “Farmers need to identify possible markets and their requirements before producing”.

He therefore applauded DMAPS’ project for treading the right path to strategically position players along the maize value chain in the Brong Ahafo Region. The project stimulates competitive farmer-based organisations (FBOs) to access post-harvest services and fair markets.

Source: B&FT