Credit allocations to the agriculture sector in Ghana have decreased to 5%, Sector Minister Clement Kofi Humado said in Accra January 21, 2014.

According to Ghana?s Food and Agric Minister, banks credit supply to the agric sector used to be around 20% in the 1980s.

Speaking at the launch of a $22 million USAID-Financing Ghanaian Agriculture Project (FinGAP), Mr Humado said despite numerous efforts made to drive investments into the country?s agricultural sector, ?allocation of credit to the sector from banking sector has dwindled from 20% in the 1980s to 5% currently?.

The Minister said among several factors, one key factor contributing to low investment in the sector is the ?perception of the sector by banks and the private sector to be risky and unprofitable?.

He explains that due to the informal nature of most agric activities in Ghana, it was difficult for banks to appraise and monitor loans due to the high transaction costs involved.

Mr Humado was confident that FinGAP will complement ongoing interventions to shore up investments in the agriculture sector.

?The USAID-FinGAP is coming at a time that agribusiness development is high on government?s agenda,? he said.

Mr. Humado mentioned that the Public-Private Partnership policy, the Ghana Commercial Agriculture Project, the Outgrower and Value Chain Fund, the Export Development and Agriculture Investment Fund and more are some of the instruments established by the government to increase agric commercialization in Ghana.

The USAID-FinGAP is a five-year project focuses on attracting finance mechanisms for rice, maize and soy value chains in northern Ghana.  The project seeks to identify and develop agribusiness opportunities and facilitate investments and loans from financial institutions through the use of business advisory service providers.

Initiated in July 2013, the project is part of USAID?s Feed the Future Programme, which aims to establish commercially-driven agricultural development services critical to ensuring sustainable food security in Ghana.

Commenting on the relevance of the project, Mr. Jim Bever, USAID Ghana, Mission Director, stated, ?FinGAP represents a commitment by the American people, not just to increasing food security but also to reducing poverty and encouraging inclusive agriculture-led economic growth and development here in Ghana.?

Mr. Rick Dvorin who serves as the project?s Chief of Party described FinGAP?s approach to addressing the access to finance constraint as ?a partnership-driven model, leveraging the capacity of private sector investors to define the technology, investment, and capacity building required for Ghana to gain a competitive advantage and meet its internal food security needs.?

By Ekow Quandzie/GBN

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