The Ghana Incentive-Based Risk Sharing System for Agricultural Lending (GIRSAL), a government-backed initiative aimed at boosting agricultural financing, has facilitated lending to 137 agribusinesses since its inception in 2019 – which comes out to roughly about GH¢1.2billion.
This was made known during the launch of its fifth anniversary under the theme ‘Cultivating Growth: Five Years of Empowering Ghana’s Agriculture through Innovative Finance and Technical Support’.
GIRSAL works with 37 partner financial institutions across the country – chief among them the Agriculture Development Bank (ADB) and Development Bank Ghana (DBG).
Indeed, the organisation’s unique credit guarantee scheme which covers up to 70 percent of agricultural loans has successfully de-risked agricultural financing and stimulated a surge in lending to a sector long considered high-risk by traditional financial institutions – and it has been described as revolutionary for both lenders and borrowers.
The financial infusion has created or sustained over 2,990 jobs, directly impacting the livelihoods of 67,000 farmers and farm workers across the country. Interestingly, GIRSAL’s credit risk guarantee scheme has resulted in some US$25million of exports earnings, with interest rates reduced by 1 percent to 6 percent.
The reduction has translated to savings of GH¢1.34million for agribusinesses, freeing-up capital for reinvestment and growth.
Greater Accra leads with GH¢422.61million in guaranteed loans; however, significant funds have flowed to traditionally underserved regions. The Northern Region has seen GH¢136.51million of guaranteed loans while Eastern Region has benefitted from GH¢178.67million.
Finance Minister Dr. Mohammed Amin Adam noted that GIRSAL has transformed the perception of risk in the agricultural sector, which has long hindered access to credit.
In fact, the initiative is unlocking much-needed capital for agribusinesses, fuelling growth, job creation and increased incomes for farmers.
In 2021, BoG approved a zero-risk weighting for credit exposures covered by GIRSAL’s Credit Guarantee Scheme. This has led to improved access to finance for farmers, enabling them to invest in better inputs, expand their operations and increase productivity.
Finally, GIRSAL’s focus on the entire value chain is evident in its loan distribution: 33.23 percent for inputs, 29.81 percent for production and significant allocations for marketing, processing and aggregation.
This approach ensures that every aspect of the agricultural process receives necessary financial support.
Meanwhile, GIRSAL has also initiated a pilot project using innovative shade-net technology to cultivate Bird Eye chili peppers for export to the European Union.
