Agric modernisation key to economic turnaround - Deputy Finance Minister
THE government has identified the deployment of agricultural modernisation and its value chains development as one of the tools to secure an economic turnaround.
A Deputy Minister of Finance, Dr John Ampontuah Kumah, who made this known, however, said the sector required affordable short-and long-term financing to be able to compete on the global stage.
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“With the right support, investment, policies and enabling environment, our government will continue to work with key sector players to unlock the enormous untapped potential of the agriculture value chain,” he said at the 2022 Ghana Agribusiness Investment Summit in Accra organised by the USAID-supported Feed the Future Ghana Mobilising Finance in Agriculture (MFA) Activity.
The theme for the summit was: “Strategic Partnerships for Sustainable Agricultural Financing.”
He said although agriculture had great potential to transform the economy through industrialisation and lead the journey to self-reliance, the sector was constrained due to low investment, inadequate access to capital and high cost of finance.
According to him, the low investment in the sector was due to the prevalent perception among financial institutions that financing agribusiness was riskier and less profitable than financing other sectors; and limited availability of financial intermediation services for agribusiness, among others.
However, he said the government’s commitment to financing agriculture was increasingly growing, with a clear determination to transform agriculture for economic growth, job creation and food security.
He outlined some initiatives by the government in support of agriculture financing, including the establishment of a development bank as a major step in agriculture financing in Ghana.
“With a capital of $600 million, the bank aims to provide long term lending and advisory services to strategic sectors in agri-business and other small businesses to help meet demand for credit and to reduce the cost of credit in the country,” he said.
Access to financing
The United States Ambassador to Ghana, Virginia E. Palmer, said the summit connected agribusinesses in need of financing to local and international investors.
She said with better access to capital, agribusinesses could buy improved seeds and fertiliser, mechanise their operations and buy processing equipment.
“Because with better access to financing, Ghanaian farmers could be the breadbasket of West Africa.”
We are here to find new ways to channel investments into agriculture which can reduce poverty, improve food security and nutrition, and contribute to sustainable economic growth,” she said.
She disclosed that in the past two months, USAID supported programmes had facilitated $16 million in financing through 15 financial institutions.
“This financing in turn supported more than 7,500 agribusinesses, including 3,600 female-led enterprises. We know these agribusinesses by name, crop and more. These are people, not just numbers,” she said.
MFA Activity
The Chief of Party, Feed the Future Ghana MFA Activity, Dr Victor Antwi, said financing was more expensive for borrowers, as financial institutions found it challenging to lend at lower interest rates.
He said in spite of that there were still financial institutions and investors interested in serving the agric sector due to its potential to contribute to food security and wealth creation.
He said the MFA offered training, technical assistance and incentives to help lenders develop financial products that would increase agricultural lending.
“MFA supports alternative and appropriate financing opportunities for agribusinesses, including listing on the Ghana Alternative Market.”
“This event is an annual activity that will culminate in the mobilisation of over US$260 million in financing for the agribusiness sector. In approximately two years of the activity, MFA has mobilised over US$178.5 million (72.5 per cent from commercial banks) for 18,636 farmers and agribusinesses (including 54 per cent female-led agribusinesses) in Ghana,” he said.
He said this was achieved through the MFA’s network of transaction advisors and partner financial institutions which were supported with training, technical assistance and pay-for-results incentives to facilitate and increase agriculture lending.
He added that the activity was also implementing a US$2.77 million COVID-19 Relief and Resilience Challenge Fund to benefit over 29,000 smallholder farmers, 66 per cent of whom were women.
Summit
Over 400 stakeholders participated in the summit to discuss current challenges and support new financing partnerships.
It connected agribusinesses in the maize, soy, groundnut, cowpea, mango, cashew, shea and other high-value export crop sectors with international and local investors, financial institutions and transaction advisors.
It is expected that increased financing opportunities discussed at the summit would help Ghanaian farmers purchase new inputs and equipment to increase crop yields, improve food security and stimulate economic growth.
