For far too long, commercial banks in the country have starved the agriculture and fishing sector of funds needed to grow – often with the reason that they are high-risk ventures. That narrative is however changing, as data from the Bank of Ghana indicate more financial support is now being extended to the sector.
According to the Statistical Bulletin (November 2019) report, the sectoral distribution of outstanding credit by banks shows that the agriculture and fishing sector received increased financial support – especially toward the last quarter of the year. Credit advanced to the sector increased to GH¢2.5billion at the end of November 2019.
This is quite significant, because as of October 2018 through to August 2019 credit advanced to the agriculture and fishing sector never went above GH¢1.7billion. The sector only began to see increased financial support from September 2019 when more than GH¢1.8billion credit was advanced by banks; and further increased to GH¢2.3billion in the following month.
The development allows a sigh of relief for players in the sector, especially farmers and agri-businesses— knowing that banks are now easing their credit stance and are ready to provide them with needed financial assistance; an opportunity they have always been waiting for.
Banks have long been unwilling to extend credit support to the agriculture and fishing sector, as they fear they would have to eventually write those debts off due to numerous challenges in the sector which could affect operations of players, hence making it difficult for them to pay back.
The lack of financial support for the sector over the years has negatively impacted its growth and contribution to GDP for many years. For a sector touted as the backbone of the country’s economy and its largest employer, a growth rate of just 4.8 percent in 2018 is nothing but miserable.
The figure is even more disheartening when considered from its contribution to GDP. The agriculture sector has been overtaken by the services sector as the major contributor to GDP. The sector contributed 19.7 percent to GDP in 2018 compared to industry that recorded 34 percent, and services which dominated with 46.3 percent.
Agriculture’s performance over the years, in comparison to the other two sectors, confirms all is not well in the sector – and action must be taken by both private actors and government if the sector is to regain the number-one spot in the economy.
Earlier this month, Chairman of the Food, Agriculture and Cocoa Affairs Committee of Parliament, Kwame Asafo-Adjei, supported calls for legislation to develop a comprehensive agricultural insurance regime that will guard farmers against risks and uncertainties associated with farming in the country.
An Agricultural Economist at the University of Ghana, Dr. Irene Egyir, has also maintained that agriculture’s growth can only get to appreciable levels if farmers are assisted to introduce technology in their farming methods; and if the private sector also responds to calls for heavy investment in agriculture.