‘Banks need to embrace agribusiness financing’

As the perceived low-hanging investment fruit like the oil and gas as well as the energy sector have caused high impairment to the banks, resulting in liquidity challenges, it has become prudent for financial institutions to turn their attention to investing in agribusiness as the best available alternative, Raymond Akakpo – Financial Management Consultant – has observed.

He said the perceived low-hanging fruit by the banks have turned out to be bad lending experiences, accounting for the ballooned non-performing loans. This, he explained, underpins the clarion call that banks must diversify their portfolios with more productive sectors like agribusiness with huge size and also scalability.

“Lending to players in the agricultural value chain gives the opportunity to identify and track value in the chain. It’s more a holistic approach to finance a particular sub-sector in agribusiness; you identify a particular crop and find out the key players, including the governance structure. You are able to identify the scale of operations in terms of value addition at every stage in the chain,” he stated.

Banks should take advantage of Ghana Agriculture Insurance Pool to mitigate pushbacks such as drought and pest infestations which have over the years made agriculture investment a risky venture, Mr. Akakpo added.

The Financial Management Consultant was speaking at a sensitisation workshop, held in Sunyani for personnel of the National Board for Small Scale Industries (NBSSI) in Brong Ahafo Region and representatives of some financial institutions. It was organised by the Feed the Future USAID Financing Ghanaian Agriculture Project (USAID FinGAP) to build the capacities of NBSSI Business Advisors and the banks in innovative ways for financing agribusinesses. The capacity building workshop was replicated in Kumasi. In all, 73 Business Advisors of NBSSI were trained in the two regions.

The NBSSI Business Advisors and financial institutions were introduced to the Business Advisory Service Providers Association of Ghana (BASPAG) to work together in order to increase access to finance for small and medium enterprises. BASPAG is an association of Business Advisory Service (BAS) providers within the USAID FinGAP network that have come together to replicate successes chalked up with the Project in facilitating financing to agribusinesses in the maize, rice and soy value chains over the last five years.

They were also taken through many topics including business planning, risk management, loan appraisal, loan monitoring and recovery, and customer service.

In an interview with B&FT, Dr. Victor Antwi – Deputy Chief of Party and Manager of Agribusiness Opportunities Development, USAID FinGAP – underscored the importance of building the capacities of NBSSI staff to be able to package and broker ‘big-ticket’ deals in pursuance of promoting the growth and development of agribusiness as a key driver of the country’s industrialisation  vision, saying: “As USAID FinGAP is existing in the next couple of months, it is worthwhile to have people who will pursue a course akin to the project’s agenda.”

He advocated the urgent need for concerted efforts to strengthen agribusiness. “Agribusiness enterprising is the way to go for Ghana, and therefore all relevant stakeholders must help make access to financing easy to enhance it.”