The Chief Executive Officer of Ghana Incentive-Based Risk-Sharing System for Agriculture Lending (GIRSAL), Kwesi Korboe, has reiterated calls for the creation of a conducive environment for agribusinesses to grow in the country.
According to him, financing the agricultural sector alone is not enough to grow the sector, though it is important.
His call follows various claims from stakeholders that agriculture is not receiving enough funding.
Despite the improvement in credit to the private sector in the past few months as economic activity picks up, the agriculture sector, in addition to forestry and fishing, continues to receive one of the lowest levels of credit from banks in the country.
According to the Bank of Ghana’s May 2022 Monetary Policy Report, at 3.5%, the agriculture, forestry and fishing sectors are the second-lowest recipients of credit to the private sector as of April 2022, only faring better than the mining and quarrying sector which received 1.8% of credit from banks in the country.
Kwesi Korboe was speaking at the launch of the Agriculture Stakeholder Convening Platform, an initiative aimed at de-risking agricultural financing to enable financial institutions to provide adequate credit for the agricultural and agribusiness industry.
“There is always a cry that it is so difficult for businesses to access finance, and we hear it every day and that may be the case, but at GIRSAL, we have learnt that finance only works better when the environment is conducive. Finance alone is not the answer. Everything has to be in place, and that is why we are taking this bold step to develop what we call a platform to bring everyone on board.”
“Agribusinesses, just like any other business have their own risk, firm-level, the value chain level and also external level and so at firm-level governance, business model, sourcing of raw material [are in the mix]. It is the same whether you are producing tomatoes or something else. How do we mitigate these risks? The external shocks we are currently seeing, global disturbances, unfair competition, climate cchange,which is a major issue, especially for production-related activities, we can’t hide from them. We have to confront it,” he said.
He further called for an inclusive approach to address challenges facing the sector.
“We have human resources available in this country, we have climatic conditions which are good, infrastructure and strong regulatory legislation but there is a challenge…….we are working in silos. The private sector has no platform to communicate with the public sector. For instance, the Ghana meteorological agency is an agency under the ministry of communication. How can you do production when you don’t even know what the weather pattern is like? Is there a discussion between the Agric sector and Ghana meteorological agency?” I doubt it.
“So you have got a situation where everyone is working his own side. Now no matter how much finance you pour in it just goes through and it goes out because if the environment is not strong, information is not cyclical. If there is no coordination among all these key players, finance, and finance alone will not solve the problem with Agribusiness. There should be policy coherence, policy coordination, policy collaboration. In doing that you also eliminate the risk that the bankers are afraid of,” he added.
He pointed out that the agriculture sector remains resilient despite the global effects of the Covid-19 pandemic and thus, the need to focus on doing more to boost the agriculture sector.