The Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) is pledging a capital injection of GH¢2billion from now till 2027 in support of financial institutions’ lending to players in the agricultural sector.
Speaking at the relaunch of the company’s operations and introduction of a Stakeholder Convening and Advocacy Platform in Accra yesterday, Board Chair Yaw Ansu said GIRSAL has since 2019 guaranteed loans to the tune of GH¢600million through some thirteen financial institutions.
The loans, according to him, have benefitted some 87 agribusinesses in the country.
“The strategic focus of the company is to use the credit risk guarantee scheme to catalyse, at least, GH¢2billion worth of loans to the sector by 2027,” he said.
With plans to inject more capital to support farmers, the company said in the coming months it will also focus on and prioritise selected agricultural value chains to achieve food import substitution and expand exports.
Currently, 22 financial institutions are in agreement with GIRSAL and are benefitting from the company’s credit guarantee scheme. Nineteen of these institutions are commercial banks.
Food and Agriculture Minister Dr. Owusu Afriyie Akoto said agriculture credit remains key to ensuring food security for the country’s medium- and long-term goals.
He said GIRSAL, in the context of agriculture finance, is important as it provides financial institutions with guarantees on loans by covering up to 70 percent of the default risk on them.
He said the credit risk guarantee scheme is intended to mitigate risks associated with agriculture lending and incentivise financial institutions to lend more, adding: “All priority agricultural commodity value chains of government qualify to access the scheme”.
Finance Minister Ken Ofori Atta, who launched the platform, said current occurrences in the global food value chain leave Ghana with no option other than to critically embark on investment into the agriculture sector.
He mentioned how Ukraine has leapfrogged many challenges to becoming the world’s largest grain exporting country – from 36 million tonnes of wheat produced in transshipment for 2010 to a current 70 million tonnes, compared to a mere six million tonnes in the early 1990s.
The stakeholder platform
The Stakeholder Convening and Advocacy Platform launch was initiated to engage government institutions and private sector participants toward identifying and resolving key bottlenecks in agriculture finance and the agribusiness space.
GIRSAL, under this initiative, will provide a sustainable and coordinated platform for dialogue among key stakeholders on technical issues impacting the agriculture sector to affect resolutions which benefit the sector.
The core objective of GIRSAL, among other functions, is to de-risk agricultural financing by financial institutions in order to stimulate investment in the sector.
