The Mastercard Foundation has hinted an ‘Access to Finance Program’ which will seek to cushion agribusinesses in their quest for financial support towards making their work sustainable.
Traditionally, the agriculture sector is a major employer in the country’s economy, however, the youth especially, are shunning away from it, citing various reasons such as lack of access to finance, marketing, among others.
Therefore, in order to whip up interest among the youth to participate in agriculture, the Mastercard Foundation is set to roll out the Access to Finance Program next year.
During a panel discussion at the 2nd edition of Youth Economic Forum organised by B&FT and the Mastercard Foundation, Program Lead, Agriculture primary Production for the latter, Daniel Ninson, explained that there is a huge financial deficit in the agriculture sector which needs to be looked at properly by financial institutions in the country.
“The issue about financing is a major challenge in this field, providing or getting some market support to be able to produce to meet some of these markets. We have a program on access to finance that is looking at exactly what you are talking about. We know that annually there is the demand of about US$2 billion in terms of agric financing that is sought out by various businesses in Ghana. How much of that are we able to meet? Currently, it stands around 300 million. So, there is a huge deficit of about 1.7 billion to be met,” he said.
With having access to cheap capital, Mr. Ninson indicated the Foundation’s ‘Access to Finance Program’ will seek to beat down interest rates and collateral coverage which have also become a huge challenge for agribusinesses, for Small Medium Enterprises (SMEs) in agribusiness.
“How do we provide long-term affordable finance to these groups? We are in talks with various banks to provide that solution where we want to reduce the current interest rate from 35 to between 5 to 8 percent and also at the same time reduce the collateral coverage from the current 120 to 150 to about 50 percent. These are the building blocks that we believe, if we are able to put in place, should make the sector very attractive in terms of financial support,” Mr. Ninson highlighted.
He also elaborated on some measures the Mastercard Foundation is taking to equip agribusinesses to access markets and also build their capacities to meet required standards.
“We are leveraging institutional structures, various aggregators, marketers that are already in the business. How do we also provide those funding support where they could guarantee the market for the businesses that you are also offering.
We also believe that equipping you with the skills to be able to continually meet those markets and also the obligations that come with the financing that you also take from the financial institutions. These are the interest areas that we believe will be self-sustaining for young people,” Mr. Ninson said.
