...unlocks $168m private capital for agribusiness in 5 years

Rick Dvorin, Chief of Party, USAID FinGAP

Access to affordable financing has always been a major setback for the growth and development of agribusiness in the country. Financial institutions are reluctant to provide financing to the agricultural sector largely because of actual and perceived risks inherent in lending to actors in the sector.

This and many reasons informed conceptualization of the USAID Financing Ghanaian Agriculture Project (USAID FinGAP). It is a five-year project (2013- 2018) with the goal of facilitating finance and investment in the maize, rice and soy supply and value chains in the North of Ghana, and improving ancillary services so that agribusinesses can operate at ‘full capacity’ and expand levels of food security in the country.

After five years of innovative and workable means of luring financial institutions to invest in agribusiness in the northern belt of the country, the curtain has been drawn on USAID FinGAP in July 2018. This write-up therefore recaps the strategies, achievements and lessons that can be drawn from the implementation of the project.

In July 2013, the USAID Feed the Future was launched the five-year project-USAID FinGAP to address the aforementioned challenge in the northern ecological zone of Ghana. Statistics say there were more than three million inhabitants, mostly living in rural agricultural communities in that part of the country who were or are vulnerable to becoming food insecure.  This is what Feed the Future through USAID FinGAP sought to tackle and promote inclusive economic growth.

Feed the Future is the United States government’s global hunger and food security initiative. It supports partner countries like Ghana in developing their agriculture sectors to spur economic growth and trade to increase incomes and reduce hunger, poverty, and under nutrition.

Besides its primary aim of establishing commercially-driven agricultural development services to boost food security and poverty reduction, USAID FinGAP also contributed to the joint efforts by the USAID and the government of Ghana in enhancing economic growth, which included the development of the financial sector infrastructure and increase small, medium and large enterprises’ (SMiLEs’) to access finance.

Financial institutions that worked with the project comprised of commercial banks, Savings & Loans, Rural and Community Banks, Microfinance Institutions, Insurance companies, Leasing companies; equity and impact investors as well as other non-bank financial institutions that were well-versed and committed to providing financing for agribusinesses in the targeted value chains. Incentives were provided to these institutions to help them to better serve agribusinesses; the incentives included support to establish agribusiness finance desks, and capacity building. USAID FinGAP strived to facilitate the reduction of risks for partnered financial institutions while cost of financing was reduced for beneficiaries.

The project pursued the development of alternative sources of financing for SMiLEs through the listing of debt or equity securities on the Ghana Alternative Market (GAX). Additionally, it deployed technical assistance, either directly or indirectly, through Business Advisory Services (BAS) providers to the financial sector to increase investments in agribusinesses within the three value chain, and worked with SMiLEs to increase their capacities to access financing.


The objectives of USAID FinGAP were achieved through the interaction of two integrated components:

  1. Agribusiness Opportunities Development (AOD) Unit identified developed and supported agribusiness and farmer proposals for agricultural supply chain investments. This involved engaging the private sector to develop market linkages through strategic partnerships with investors that integrated SMiLEs into their supply and value chains, creating platforms for the deployment of financial solutions along the value chains.
  2. Financial Sector Support (FSS) Unit facilitated the financing of opportunities identified and developed by the AOD Unit, worked with financial intermediaries to build capacity and created new incentives for launching financial products and investment in agribusiness.

USAID FinGAP managed to unlock over $168 million in private capital disbursed to almost 3,000 agribusinesses for commercial development in the maize, rice and soy value chains. The financing, which included loans and equity investment to finance working capital and fixed capital investments of these agribusinesses benefited almost 170,000 smallholder farmers in northern Ghana-40% of whom were women-through improved access to inputs, markets and incomes.

The project established networks of financial institutions willing to finance/invest in agribusiness and BAS providers who are now members of the Business Advisory Service Providers Association of Ghana (BASPAG). BASPAG is thereafter expected to take-over the hosting of the USAID FinGAP Annual Ghana Agribusiness Investment Summits to sustain gains made over the years.

Success stories

Procurement of NIR spectrometer for GAPFA

Lack of laboratory equipment to analyse raw materials for feed formulation and nutritional values of finished product was a challenge for the Greater Accra Poultry Farmers Association (GAPFA). There were unnecessary delays as the Association had to rely on national regulatory bodies and research institutions for test results. GAPFA decided to acquire a Near Infra-Red (NIR) spectrometer to conduct in-house tests for instant results of quality assurance on inputs and outputs.

The USAID FinGAP intervened by assisting the Association to secure funds to acquire the $77,000 machine. The poultry farmers were introduced to the then Export Trade, Agricultural and Industrial Development Fund (EDAIF), an agency of the Ministry of trade and Industry as the source of the funding. Managers of the project saw the importance of supporting quality feed supply to stimulate demand from smallholder farmers of maize and soy, key ingredients in animal feed.

With the commissioning of the NIR spectrometer, GAPFA has been leading the way in modern technology in feed production for the poultry industry. “GAPFA’s services save us time, cost and the risk of formulating our own feed under unhygienic conditions. When the composition and nutritional values of feed are not in the right proportions, production of birds drops and egg sizes reduce, resulting in losses. Now we are assured that the quality of the feed we buy from GAPFA meets international standards,”Gifty Rudor of Logos Farms, a regular customer said.

PBC raises short-term equity fund on GSE

In October 2016, the Produce Buying Company (PBC) Limited, one of the Ghana Cocoa Board’s top five licensed buying companies, sought an alternative form of financing for their cocoa buying activities. PBC required GH¢1.8 billion a year (approximately $450 million) to purchase cocoa from smallholder farmers during the two annual harvest seasons.

Accessing short-term loans from commercial banks required long application lead times, burdensome lending terms, and interest rates as high as 30%.

Thanks to the bilateral US-Ghana Partnership for Growth program, USAID FinGAP was tasked to with helping strengthen Ghana’s capital markets for agribusiness focused SMiLEs to access alternative finance there. PBC turned to the Databank Brokerage Limited (DBL), a USAID FinGAP business advisory service provider, to list debt on the Ghana Stock Exchange’s (GSE) Ghana Fixed Income Market (GFIM).

The process was facilitated for PBC to raise funds up to a maximum of GH¢400 million for five years. After it raised GH¢154 million in November 2016, PBC still had additional borrowing capacity of GH¢246 million under the program. The financing cycle could continue until 2021 when the program expires. This alternative form of financing came with faster turnaround times, more appropriate terms of lending, and most importantly, affordable interest rates.


Per USAID FinGAP’s innovative modus operande and the corresponding success rate in agribusiness financing in the last five years, it is worthwhile for stakeholders to reflect on this approach for possible internalization in the country’s scheme of financing agriculture. This will go a long way to break the yoke of financial constraint that has crippled the sector.

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