The government has been urged to create an enabling environment within the agricultural sector to make it more attractive for banks to aggressively invest in.
The Managing Director of GN Bank, Mr Patrick Anumel, who made the call, said for instance that, the government could invest more to provide irrigation facilities that could guarantee all year round production of crops, as well as infrastructure such as roads to transport crops from the farmlands to the market centres.
In an interview with the Daily Graphic in Accra on Tuesday, he said, “The agricultural sector is a risky area for banks to venture into; we want to do it but we are careful because we do not want to lose funds which belong to our customers who have entrusted us with their money for safekeeping”.
However, he reiterated that with the right and conducive environment, the banks would not hesistate to do more to boost the growth of the sector.
Agriculture in Ghana is estimated to provide up to 80 per cent of employment whether directly or indirectly, and therefore requires more attention from the government.
Experts have complained about governments’ talk over the years, about the need to ensure food sustainability, while they do very little to ensure that; in the end Ghana is importing food when large tracts of arable land lie fallow.
For many years, successive governments have not been able to move the agricultural sector, particularly with crop production from rain-fed to irrigation as pertains in other jurisdictions such as neighbouring Cote d’ Ivoire and Burkina Faso.
As a result, farmers are made to rely solely on the rains, which have become inconsistent as a result of climate change.
Bushfires, among other natural disasters, are also not helping the cause of farmers as they lose their produce when such disasters occur.
Since many of them rely on loans to buy their farm implements and seeds, such natural disasters impacted negatively on their ability to pay back. Some reportedly commit suicide, while the banks that lend the money to them also suffer bad debts.
Against this background, Mr Anumel said should the government address the needs of farmers in the country, the banks would be willing to provide the funding for the farmers to cultivate crops in large quantities to meet local demand and for export.
He said, “GN Bank is supporting the agric sector in the country although not in the manner that the bank expects to do. We plan to do more and we will explore all avenues to support that sector”.
“The banks don’t finance the agriculture sector as they do for other sectors. This is because agric is more risky and has not found the mitigating factors in the country.”
“Any business is risky but we, as banks, choose those that are less risky and so if you compare it to others and you are doing financing, you will realise that if you have to pick, you will pick manufacturing and services, with agriculture as the last option”, he said.
He said: “If there are some enabling factors such as irrigation to mitigate against the weather, many of the banks will go there”, Mr Anumel said.
The GN Bank MD noted that the bank would continue to explore all avenues to help grow the sector.