Efforts to boost agriculture financing in the country has received a boost as Development Bank Ghana (DBG) joins forces with Ghana Incentive-Based Risk Sharing for Agricultural Lending (GIRSAL) to train staff of financial institutions on agriculture financing.
The DBG and GIRSAL programme is designed to enhance financial institutions’ agricultural knowledge, improve their capacity to assess agricultural loan applications, and structure and manage agribusiness lending.
Speaking at one of the trainings in Accra on Tuesday, the Deputy Managing Director, DBG, Michael Mensah-Baah, said lending to the Ghanaian agricultural sector by financial institutions had traditionally been seen as unattractive.
According to him, agriculture received around 4 per cent of banks loans compared to its high contribution to Gross Domestic Product and employment and potential for driving economic transformation.
That, Mr Mensah-Baah said had been largely attributed to the high risk associated with the sector.
He said it was important that financial institutions had a clear understanding of the value chain of agribusiness.
“Development Bank Ghana (DBG) in partnership with GIRSAL seeks to correct this. GIRSAL’s agricultural credit risk guarantee and technical assistance have been introduced to stimulate more investment into the agricultural sector,” he said.
Under the Memorandum of Understanding signed between DBG and GIRSAL in March 2022, Mr Mensah-Baah, said both organisations would collaborate to provide capacity-building and innovative interventions to improve agriculture financing in Ghana.
The Chief Executive Officer of GIRSAL, Kwesi Korboe, urged banks to increase funding for agriculture right from planting to processing to help the sector to grow and thrive.
He said even though the sector was considered risky, there were mitigating tools to address the risk.
Mr Korboe said the country’s agricultural sector was resilient, stressing that when other business sectors collapsed and others went down as a result of the COVID-19 pandemic, the agricultural sector still was still strong.
In the first phase of the programme which was held between August 2020 and September 2021, a total cohort of 262 mid-level staff from 24 financial institutions participated.
The positive feedback received from participants on the programme indicated that the course has been effective in demystifying the agricultural sector and the prevailing perception that the sector is “high risk”.
Development Bank Ghana (DBG) and GIRSAL are co-funding a second phase which involves three (3) additional training cohorts from August to December 2022.
The Chief Operating Officer of GIRSAL, Mr Takyi Sraha, said training sessions began with 55 participants from 12 financial institutions at the National Banking College on August 9.
The two-module course covered Ghana’s agribusiness environment, value chains, agriculture insurance, and agricultural loan appraisal techniques.
He said it was targeted at agriculture desk officers, relationship managers, credit risk officers, and credit analysts included practical field visits.
Mr Takyi, said GIRSAL provided technical support to assess agricultural loan applications submitted to DBG, support applicant PFIs to identify risks, structure financing opportunities, and issue credit guarantees.