The US Ambassador to Ghana, Virginia E. Palmer, says efforts to improving the country’s macroeconomic conditions must show the market that reform is happening and concessional financing is imminent.
According to her, this is what the impending International Monetary Fund (IMF) program for the country would exactly offer, and therefore urged leadership to reach a robust and timely agreement with the IMF to get things back on track.
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“Unpredictable interest rates and high inflation create uncertainty. The transfer from savers to investors breaks down. Additionally, high government borrowing can crowd out private lending. These macroconditions are tough right now in Ghana.
“It is a challenging time for farmers and the finance sector, in particular because of high inflation and depreciation of the cedi. Additionally, fertilizer prices have been high, reducing usage which could lead to smaller yields in the coming months.
The cost of fertilizer has made access to credit even more crucial for agribusinesses and farmers, especially smallholder farmers,” she said.
The US Ambassador made these remarks during the 2022 Agribusiness Investment Summit in Accra. The Summit was under the theme: “Strategic Partnerships for Sustainable Agriculture Financing.”
The Agribusiness Investment Summit was organized by the USAID-supported Feed the Future Ghana Mobilizing Finance in Agriculture (MFA) Activity.
It brought together about over 400 stakeholders in the value chains of maize, soy, groundnut, cowpea, mango, cashew, shea, and other high-value exportable agro-commodities, focusing on how to build fruitful partnerships to expand lending to farmers and agribusinesses.
To help improve the agribusiness ecosystem in the country, Ambassador Palmer said the US Government is creating opportunities through activities such as MFA which seeks to create enabling environment to boost agribusiness financing, adding, “The U.S. Government is also partnering with private sector actors to ensure fertilizer is available and accessible to smallholder farmers.”
“Despite the challenges, I know many of you have continued to keep the wheels of the economy rolling. In just the past two months, our programs facilitated $16 million in financing through 15 financial institutions. This financing in turn supported more than 7,500 agribusinesses, including 3,600 femaleled enterprises. We know these agribusinesses by
name, crop, and more.
These are people, not just numbers,” she revealed.
Addressing the Summit, the Deputy Minister of Finance, Dr. John Ampontuah Kumah, affirmed government’s commitment to increasing agriculture financing with a clear determination to transforming agriculture for sustainable economic growth.
Buttressing his claims, the Deputy Minister said the government through the Ghana Incentivebased Risk Sharing for Agriculture Lending (GIRSAL) initiative is directing public policy towards de-risking the agricultural sector as well as attract sustained private sector investments along its entire value chain.
“As a non-bank financial institution, GIRSAL has been at the forefront of agricultural financing, through the issuance of agricultural credit guarantee instruments, to improve credit to the agricultural and agribusiness sectors.
In 2021, the value of agriculture loans for which credit Guarantee issued to financial institutions by GIRSAL was GH¢241.7 million,” Dr. Kumah said.
The Chief of Party, Feed the Future Ghana Mobilizing Finance in Agriculture (MFA) activity, Dr. Victor Antwi, said in approximately two years, the Activity has mobilized over $178.5 million (72.5% from commercial banks) for 18,636 farmers and agribusinesses (including 54% female-led agribusinesses) in Ghana.
“We achieved this through our network of transaction advisors and partner financial institutions who are supported with training, technical assistance, and payfor-results incentives to facilitateand increase agriculture lending.
The Activity is also implementing a $2.77 million COVID-19 Relief and Resilience Challenge Fund to benefit over 29,000 smallholder farmers, 66 percent of whom are
women,” he stated.