Smallholder farmer, George Amankwaah
highlights access to agricultural financing as constituting a critical factor
in enhancing productivity of Ghanaian farmers and promoting agribusinesses.
Commercial
banks regard the sector as high risk and are often slow in responding to the
financial needs of farmers.
Ghanaian
agriculturists, like others across Africa, are therefore constrained throughout the production, marketing and distribution stages
of their operations.
“We’ve
been doing well by producing so many foodstuffs for the country. Unfortunately the
banks that are supposed to grant us loans to do the expansion have ignored us
totally; looking at the interest rates, it becomes very hard for one to go for
funds,” George observed.
The
paradigm is however changing. Government is
heeding to calls to incorporate farmers’ access to financial services into
national policies.
New
public-private partnerships are also opening up opportunities for
agribusinesses to receive support – from production to value addition.
“Everybody
always talks about government investing but right now the private sector has a
big role to play to take up some of the agricultural investments that are now
available for them to make all the money they want”, says Dr. Robert Kwabena Asuboa, a Director at the Grains and
Legumes Development Board. “There is so much money sitting with the Venture
Capital where private people can harness and use it to invest into
agro-processing and adding value to agricultural products.”
Ghana’s
Venture Capital Trust Fund has a mandate to provide low-cost long term
financing to small and medium scale enterprises.
Since
inception in 2006, the Trust Fund has disbursed $3.5million in agricultural
value chain financing of cereals and grains for the poultry, livestock and
brewery industries.
The
Trust Fund is now activating a $20million agricultural fund to expand financing
of agricultural ventures, says Chief Executive Officer, Daniel Duku.
“It’s
a bigger fund so more entrepreneurs, more SMEs can apply,” he stated. “That is
not necessarily going to stick to the Soya bean but all the agric sectors of
the economy.”
Agribusinesses,
however, complain about the cumbersome processes in accessing support from the
Trust Fund, which often do not take into consideration the seasonality of
agricultural production.
Mr.
Duku says a review has resulted in cutting down the processing period from six
to three months. “A lot have changed and we are receiving more applications at
this time and processing them faster,” he noted.
The
Trust Fund has also proposed to provide wholesale lending for rural banks to
increase their capitalization. This is to extend the reach of venture capital
to smallholder farmers in rural communities.
Local
agro-processor, Robert Nketia is cautiously optimistic of the Trust Fund’s
renewed drive to support agriculture.
“Most
of the already existing investments went to other sectors, neglecting the
agricultural and agro-processing. But they’ve now realized their mistake and
now focusing on agriculture which will have an impact in creating employment
and making it possible that the rural areas are also opened up”, he opined.
“The question ahead of us is: are they really committed? Because that is only
way that as a country we can move forward.”
Ghana
is among African countries spending at least 10 percent of their annual budget
on agriculture, in line with the Comprehensive Africa Agriculture Development
Programme (CAADP), an initiative to boost agricultural productivity in Africa.
The
programme is implemented by the New Partnership for Africa’s Development
(NEPAD) Agency of the African Union.
“By
adopting the provisions of CAADP programme, countries such as Ghana, Ethiopia
and Rwanda have been able to make remarkable progress in the area of food
production,” observed Dr. Abdalla Hamdok, Deputy Executive Secretary, UN
Economic Commission for Africa (UNECA).
Ghana’s
annual 10 percent investment in agriculture and the inflow from private
investments means farmers can access more inputs for higher productivity,
improved markets and increased opportunities in agribusiness.
But to commit to the Malabo Declaration of ending
hunger and halving poverty by 2025, Ghana needs to do more in achieving higher
levels of food production.
The
government has a policy of targeted financing in agriculture, according to
Acting Trade and Industry Minister, Dr. Mustapha Ahmed.
According
to him, “there is special funding arrangement for some industries in poultry,
some industries in the pharmaceuticals and then also agribusiness so that they
can all boost their production, meet international standards, so that when they
export their produce they can meet the market standards”.
The
policy falls within NEPAD’s Agribusiness Strategy 2012, which has a programme
that seeks to carry out a set of strategic interventions meant to lay the
foundation for sustainable economic development through agribusiness, private
investment and agricultural trade across Africa.
It
is expected that Ghana’s amended Export, Trade, Agricultural and Industrial
Development Fund (EDAIF) would help propel the growth of Ghana’s
agriculture and food processing industry.
Hopefully,
farmers, like George can be well positioned to take advantage of existing
public-private financing opportunities to increase food production.