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Banks in Ghana indirectly stifling agric growth - Fatima Alimohamed

The Chairperson of the Agribusiness Association of Ghana Industries, Fatima Alimohamed, has said the stiff application and access procedures for donor funds by banks to agribusinesses has been indirectly derailing growth of the agricultural sector.

Banks in Ghana indirectly stifling agric growth - Fatima Alimohamed

Speaking on the plenary at the 11th Ghana Economic Forum in Accra, on the topic ‘Ensuring food sustainability and security: an analytical overview of the PFJ and implications for economic growth’, Madam Alimohamed said it is unfortunate that when donor agencies release funds through banks, these banks become bureaucratic in the release of said monies to agribusinesses.

The challenge, she said, is that these banks through their due diligence begin to consider these applicant farmers as typical clients rather than entrepreneurs, adding: “This forces young businesses in the agricultural sector to give up”.

Madam Fatima indicated that the situation is so because the banks have to report to donors on how the funds were disbursed.

She however explained that a more innovative approach must be adopted by banks on extension of donor-funded credit to the SMEs, in order to curtail the high rate of non-access to these funds.

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Most of these agricultural SMEs, according to Madam Alimohamed, are owned by young women and have already been selected by the donors; however, banks have to apply their procedure for disbursement, which most often disadvantages the applicants.

Meanwhile, CEO of the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL), Kwesi Korboe, said banks cannot be blamed entirely – as the lack of data on applicants who seek funds for agricultural purposes remain a challenge.

The GIRSAL, he indicated, has partnered these banks to de-risk agricultural financing and stimulate increased lending to the agricultural sector.

We have been doing significantly well by supporting the sector as a non-banking financial institution to spur growth in the agricultural industry through sustainable lending and support to farmers and agribusinesses.

Mr. Korboe however called for focus and determination by players in the agricultural sector to enable an increase in agricultural exports with less concentration on imports.

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There is a need to focus on domestic production to boost exports with less emphasis on imports. That is the only way to reduce food inflation and make life better for Ghanaians,” he added.

Indeed, the GIRSAL has since 2019 guaranteed loans to the tune of GH¢600million through some thirteen financial institutions.

The loans, according to the company’s records, have benefitted some 87 agribusinesses in the country.

The company is seeking to use the credit risk guarantee scheme to catalyse, at least, GH¢2billion worth of loans to the sector by 2027.

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