Development Bank Ghana (DBG) is partnering with Ghana Incentive-Based Risk Sharing for Agricultural Lending (GIRSAL) to train staff of financial institutions on agriculture financing in an effort to boost agriculture financing in the country.
The DBG and GIRSAL programme is designed to enhance financial institutions’ agricultural knowledge, improve their capacity to assess agricultural loan applications, and structure and manage agribusiness lending.
Michael Mensah-Baah, the Deputy Managing Director of DBG Ghana, speaking at one of the training in Accra, stated that lending to the Ghanaian agricultural sector by financial institutions has traditionally been seen as unattractive. According to him, agriculture receives around 4 per cent of bank loans compared to its high contribution to Gross Domestic Product and employment and potential for driving economic transformation.
The reason for this, Mr Mensah-Baah said is attributed to the high risk associated with the sector. He thus, noted that it is important that financial institutions have a clear understanding of the value chain of agribusiness.
“Development Bank Ghana (DBG) in partnership with GIRSAL seeks to correct this. GIRSAL’s agricultural credit risk guarantee and technical assistance have been introduced to stimulate more investment into the agricultural sector.”
Mr Mensah-Baah
Memorandum of Understanding
Meanwhile, under the Memorandum of Understanding signed between DBG and GIRSAL, Mr Mensah-Baah noted that both organisations would collaborate to provide capacity-building and innovative interventions to improve agriculture financing in Ghana.
Kwesi Korboe, the Chief Executive Officer of GIRSAL, on his part, urged banks to increase funding for agriculture right from planting to processing to help the sector to grow and thrive. He averred that even though the sector is considered risky, there are mitigating tools to address the risk.
Mr Korboe noted that the country’s agricultural sector is resilient, stressing that when other business sectors collapsed and others went down as a result of the COVID-19 pandemic, the agricultural sector still was still strong.
In the first phase of the programme, a total cohort of 262 mid-level staff from 24 financial institutions participated. The positive feedback received from participants on the programme indicated that the course has been effective in demystifying the agricultural sector and the prevailing perception that the sector is “high risk”.
Development Bank Ghana (DBG) and GIRSAL are co-funding a second phase which involves three (3) additional training cohorts before the year ends.
Mr Takyi Sraha, the Chief Operating Officer of GIRSAL, disclosed that training sessions began with 55 participants from 12 financial institutions at the National Banking College
The two-module course covered Ghana’s agribusiness environment, value chains, agriculture insurance, and agricultural loan appraisal techniques.
The Chief Operating Officer of GIRSAL indicated that it is targeted at agriculture desk officers, relationship managers, credit risk officers, and credit analysts which included practical field visits.
Mr Takyi, indicated that GIRSAL provided technical support to assess agricultural loan applications submitted to DBG, support applicant PFIs to identify risks, structure financing opportunities, and issue credit guarantees.
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