Banks and microfinance institutions (MFIs) will be offered the necessary risk protection to enable them offer credit facilities to farmers in the country, with the start of the Ghana Incentive-based Risk Sharing System for Agricultural Lending (GIRSAL), 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 is hoped to 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 GIRSAL, 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 human control.
However, he said, the support that is going to be offered, a collaborative project with some development partners like 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 at any eventuality where 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.
This means farmers will have to take some insurance cover to provide some form of security against any unexpected occurrences. He, therefore, encouraged farmers to consider insurance issues seriously.
Additionally, farmers are expected to be offered some technical assistance, particularly where some gaps are identified – whether the farmer is able to handle credit.
For the project to succeed, and also to reduce the risk of the project implementors, the loans will be granted on lines of value-chain.
It was against this backdrop that he appealed to farmers to pay back their loans, and on time to enable banks to also give loans to others or pay back its depositors. He stated “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 which will like to be part of the project will be required to have agricultural departments or desks or units.
This is “because we want them to be serious with issues that concerns farmers,” he stated. Meanwhile, he said performing banks and MFIs under the programme will be duly recognized.
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 for mass economic growth, pursue the welfare of members and smallholder farmers.
He added that they will now be able to engage the government on policies that affects the interest of farmers in Ghana such as the Planting for Food and Jobs, One District One Factory, among others and continue to advocate for national interest of farmers.
The rebranding and strategy document focus on the youth and women empowerment, improving members’ access to funding for their businesses, developing members’ skills towards agric modernization among other objectives.
The Ashanti Regional Minister, Simon Osei Mensah, said agriculture is the most important factor that drives every modern economy and industrialization while refuting that farming is never the preserve for the aged nor school drop outs.
The event, was held under the theme “Making the most out of our best farmers and fishermen.”