Financing Agriculture
Financing Agriculture

Stakeholders in Ghana’s agricultural sector on Thursday, converged at a forum in Accra, to brainstorm on the best ways to access funding from financial institutions for expanded production.

The two-day forum was jointly organised by the GIZ, the Competitive Cashew Initiative (ComCashew), Solidaridad and the African Cashew Alliance, with funding from the Swiss State Secretariat for Economic Affairs (SECO) under its Ghana Private Sector Competitiveness.

It event was held under the theme: “The Role of Financial Institutions in the Agricultural Sector,” with a focus on the Cashew and Oil Palm Value Chains.

Ms Rita Weidinger, the Executive Director of the Competitive Cashew Initiative, said the agriculture and agribusiness sector in sub-Saharan Africa were estimated by the World Bank in 2016 to reach one trillion dollars in value by 2030, up from 313 billion dollars in 2010.

However despite the growth, agribusiness were faced with a multibillion-dollar financing gap estimated at 11 billion dollars annually, she said.

She said it was in this regard that connecting providers of funds with agribusinesses has become crucial, especially at a time when traditional banking and financial products have failed to meet the needs of this sector mainly due to a lack of understanding of their operations and also the associated risks of agricultural value chains.

The forum sought to address the gaps, to enhance the knowledge of the financial institutions on processing and the agribusiness dynamics in Ghana to help increase the financial support allocated to the respective businesses.

Ms Weidinger said some processors have already been taken through human development and capacity building workshops which helped in shaping and conceptualising their business models into business plans and proposals.

She said based on the outcome of the forum ComCashew, Solidaridad and the Africa Cashew Alliance would continue to guide selected participants to eventually secure suitable and long-term funding needed for business expansion and development.

Mr Ron Strikker, the Ambassador of the Netherlands to Ghana, said the oil palm and cashew sub-sectors and agriculture as a whole, were still perceived as risky hence the need for a concerted effort on investment and financing in order to reduce the risks.

He said efforts were being made to de-risk financing in the cashew and oil palm sub-sectors, so that public money would be leveraged with commercial funding to scale-up efforts made by development agents such as Solidaridad.

Mr Strikker said financial institutions together with such development agents could develop innovative models in financing which were better at dealing with risks, reducing transaction costs and enabling better flow of information for financial institutions to assess opportunities.

Mr Strikker called for policy assistance in overcoming bottlenecks to agriculture financing and agribusiness in general, citing issues such as land rights and usage, and quality regulations.

Mr Papa Kow Bartels, a representative of the Ministry of Trade and Industry (MoTI), commended the organisers for the timely initiative, saying despite the positive outlook, borrowing costs remained high, with the current financing solutions from the banking sector not best suited for the dynamics of the agricultural sector, due to the inflexible and unfavourable terms.

Mr Bartels said government has been focused on finding ways to promote the tree crop sector and would soon set up the Ghana Tree Crop Development Authority to work to promote Cashew, Oil Palm, Rubber and the Shea production, as these crops had high potentials and requires structured public and private support.

He said the Ministry was also working towards value addition to the country’s non-traditional exports, and setting up of industrial parks in all regions to maintain a healthy value chain, market development, and ensuring the establishment of strategic anchor industries to absorb raw material from farmers.

There is also an ongoing process to mechanise and industrialise the agricultural sector as the government remains keen on its development agenda, with intervention programmes such as the Planting for Food and Jobs to encourage local production against imports, and also the Planting for Export and Rural Development (PERD) Programme, which ensured value addition, he said.

Mr Patrick Zeal, the Programmes Manager for Planting for Export and Rural Development, said government is committed to enhance and promote the processing sector, with the vision to double cashew processing in volumes by 2020.

He also spoke about ongoing efforts to ensure the right crop diversification, changing the mind-set of farmers from production to business, building strong extension services, and ensuring the formalisation of the value chain for financial access, to help address the challenges.

Mr Seth Osei Akoto, the Representative of the Ministry of Food and Agriculture (MoFA), said cashew in 2018 contributed 196 million dollars to Ghana’s economy, representing 53 per cent of the overall value non-traditional export which was 371 million dollars.

He said the Ministry continues to be the lead agency for the cashew and oil palm value chains, spearheading several efforts and interventions with development partners to realise a common pre-set objectives for all stakeholders.

The five-year PERD programme would support one million farmers in 170 districts with certified free planting materials to cover one million hectares of farmlands and engage 10,000 young graduates as crop specialised extension officers, but the success of these interventions would depend largely on appropriate financing, through the various value chains to transform ideas into concrete and tangible ends.

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