Two institutions train financial institutions on agric financing
THE Development Bank Ghana (DBG) has partnered with the Ghana Incentive-Based Risk Sharing System for Agricultural Lending (GIRSAL) to train staff of some financial institutions in the country on agriculture financing.
The first phase of the programme, which was held between August 2020 and September 2021, saw a total of 262 mid-level staff from 24 financial institutions participating.
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The second phase of the training which is expected to be held between August to December 2022, would also see 55 staff from 12 financial institutions participating.
The agriculture sector is perceived as one of the riskiest sectors for any financial institution to invest in and available data suggests that lending to the Ghanaian agricultural sector by financial institutions has traditionally been seen as unattractive.
The sector receives just about four per cent of bank loans, which is very poor, considering its high contribution to gross domestic product (GDP), employment and the economy as a whole.
It is against this background that the two institutions are collaborating to help demystify the agriculture sector and the prevailing perception that the sector is "high risk".
The training programme is, therefore, designed to enhance financial institutions' agricultural knowledge and improve their capacity to assess agricultural loan applications and structure and manage agribusiness lending.
The two-module course covers Ghana's agribusiness environment, value chains, agriculture insurance and agricultural loan appraisal techniques.
It is targeted at agriculture desk officers, relationship managers, credit risk officers and credit analysts. The course also includes a practical field visit.
Conscious effort
At the opening of the training, the Deputy Chief Executive Officer (CEO) of DBG, Michael Mensah, said it was important that financial institutions had a clear understanding of the value chain of agribusiness.
He said that could only be achieved when a conscious effort was made at understanding agribusiness.
He noted that when that was done, giant strides would be made in de-risking agribusiness lending.
The Deputy CEO also pointed out that a memorandum of understanding (MoU) had been signed between the two institutions to provide capacity-building and innovative interventions to improve agriculture financing in the country.
Critical partner
Also speaking at the opening, the CEO of GIRSAL, Kwesi Korboe, said DBG was a critical partner for GIRSAL with the former, set up to provide long-term wholesale financing, credit guarantees, and business development services to increase overall lending to priority sectors, including agriculture.
He said GIRSAL would also continue to provide technical support to assess agricultural loan applications submitted to DBG.
He noted that GIRSAL would also support applicant private financial institutions to identify risks, structure financing opportunities, and issue credit guarantees.
Know this
DBG’s mission is to:
• Facilitate and strengthen long-term credit flow to Ghanaian businesses to drive long-term economic growth and transformation.
• Empower banks and entrepreneurs through financial innovation and other advisory services to strengthen the ecosystem in which businesses operate.
• Promote excellence within the businesses we support in terms of Environmental, Social and Governance.