Banks and microfinance institutions (MFIs) will be offered the necessary risk protection to enable them offer credit to farmers, with the start of the Ghana Incentive-based Risk Sharing System for Agricultural Lending (GIRSAL) scheme, the Bank of Ghana (BoG) has said.
GIRSAL, which is expected to take off in 2019, is an initiative that provides incentives to financial institutions to grant loans to those in the agricultural sector, often touted to be a risky sector by some banks.
This agricultural financing support programme, government hopes, will empower farmers economically to be able to invest in the farming business while also making them competitive, both at home and abroad.
The Head of GIRSA at the Bank of Ghana, Mr. Thomas Essel, said farmers face difficulties in accessing loans from banks due to several factors some, of which are beyond their control.
The support that is going to be offered, which is a collaborative project together with some development partners like the Alliance for a Green Revolution in Africa (AGRA), African Development Bank (ADB), United States Agency for International Development (USAID), is intended address these contingencies.
He said giving credit alone to farmers is not enough, because when the farmer does not get market for the produce it would be difficult to pay back the credit. But to address this challenge, GIRSAL has been designed as an integrated scheme to grant some respite to the farmer.
He, however, appealed to farmers to make it a habit to pay back their loans and on time, if the programme is to be sustained. “No financial institution will give out loans when it is not sure it will get it back.”
Mr. Essel who was addressing farmers at the rebranding of the National Farmers and Fishermen Award Winners Association of Ghana (NFFAWAG) and the launching of its strategic document in Kumasi, noted that banks and MFIs wanting to be part of the project will be required to have agricultural departments, desks or units.
This is “because we want them to be serious with issues that concern farmers,” he stated. Meanwhile, he said performing banks and MFIs under the programme will be duly recognised.
The Chairman of NFFAWAG, Mr. Davies Karboe, said the association is repositioning itself in an effort to vigorously support the agricultural agenda of the government, whilst seeking the welfare of members and smallholder farmers.
The rebranding and strategy document focus on the youth and women empowerment, improving members’ access to funding, and developing members’ skills towards agric modernisation, among other objectives.