The Annual Percentage Rates (APR) and Average Interest (AI) report for December 2017 released by the Bank of Ghana have shown that the lending rate to the agriculture sector remain high, as it hit 31.1 percent at the close of 2017.
The report shows that out of the 31 commercial banks in the country, 13 of them have their rates above 30 percent.
Premium Bank tops with rates between 33.7 to 38.7 percent, followed by The Royal Bank with 37.4, and NIB 37.2 percent. Omni Bank and HFC Bank follow with 36.4 and 36.2 percent respectively.
Barclays Bank lends to the sector at between 23.6 and 35.9 percent; First Atlantic 35.8 percent; Stanchart 22 to 34 percent; Fidelity 33.7 percent; UBA 32.9 percent; Energy Bank 32.8 percent; GN Bank 26 to 32 percent; and FBN Bank 31.7 percent.
Banks still consider the agriculture sector high-risk, which was recently underscored by Managing Director of Stanbic Bank, Hassan Andani, who said: “From where we stand, we are very, very far away from where agribusiness can attract the most important resource that every sector needs, which is money”.
He said there is need for collaboration between government and the private sector to find a solution to the problem.
“We have to collaborate to create the enabling environment that enables farmers, agribusiness people to access the most important resource—money—in a very competitive manner. So, we have to have a national level organisation that makes agribusiness something that people will look up to.
“We have to have, within the national economy, an agri-sector organisation that makes agribusiness very attractive; and we must have – at the farmer or business unit level – an organisation that makes the deployment of capital into these units profitable,” he added.
Touted as the backbone of the country’s economy, and being the largest employer, the sector has been bedevilled with a lot of challenges that have retarded growth prospects over the years.
For example, in 2015 the sector grew by 0.4 in the first quarter but inched up to 3.7 percent, 4.4 percent, and 2 percent in the last three quarters respectively.
The year 2016 was nothing to write home about; after rising to 5 percent in the first quarter, the sector’s growth dropped to 3.9, 2.8 and a miserable 1.9 percent respectively for the second, third and fourth quarters.
But the sector showed a bit of hope in 2017 as it grew by 7.7 percent in the first quarter, but dropped to 3.4 percent and jumped to 10 percent in the third quarter, and contributed 23 percent to GDP.