The Ministry of Finance has launched a financial assistance project being funded by the International Fund for Agricultural Development (IFAD) to support more than 540,000 smallholder rural farmers spread across six regions in the country.

Meanwhile, IFAD is also funding the implementation of the Affordable Agricultural Financing for Resilient Rural Development (AAFORD) project to be implemented in the Bono, Bono East, Ahafo, Northern, Savannah and North East Regions.

The project is expected to provide services directly to about 75,000 poor rural households, and indirectly to about 465,000 individuals in smallholder households to support food security and improve the living standards of smallholder farmers, poor and vulnerable women, and the youth in the beneficiary regions.

Dr Mohammed Amin Adam, a Minister of State at the Ministry of Finance, who launched the project in Sunyani, highlighted the contributions of the agriculture sector to national development, noting that the sector remains an essential contributor (40%) to Ghana’s export earnings.

Dr Mohammed Amin Adam indicated that the sector is also a significant source of inputs for the manufacturing industry, with two-thirds of non-oil manufacturing depending on agriculture for raw materials, while at the same time providing over 90 per cent of the food needs of the country.

According to the Third Ghana Economic Update 2020 by the World Bank, around 71% of formal employment in rural areas is in the farming sector, indicating the importance of increasing agrarian incomes as a means of lowering rural poverty.

The minister averred that agribusiness has a very high multiplier effect on employment, creating over 750 jobs for every additional US$1 million of output as indicated by the Ghana Economic Update 2018.

Yet, Dr Adam added that agricultural growth is affected by low productivity and competitiveness, stating that rain-fed agriculture is practiced in around 96 per cent of the farming area, informal private small-scale irrigation was prevalent in three per cent of the area and formal irrigation covers 0.4% of the agricultural lands.

Importance of Agriculture to the Ghanaian Economy

Dr Adam noted that due to the importance of agriculture to the Ghanaian economy and the livelihoods of the ordinary citizenry, the government over the years has conscientiously introduced policies to boost the sector and improve the livelihoods of rural folks and to curtail poverty levels among its citizens.

Notable among such policies, Dr Adam said include the Medium National Development Policy Framework (MNDPF 2018-2021) which recognized the growth of agriculture as the main driving force for rural development and transformation as well as the Planting for Food and Jobs (PfFJs) initiative focusing on smallholders with two to three acres land to access improved seeds and fertilizers at 50% subsidy, extension services and marketing opportunities.

The Planting for Exports and Rural Development (PERD) initiative focused on improving the productivity of export-oriented tree crops such as cashew, coffee, cotton and coconut and the Ghana Commodities Exchange (GCX) to help farmers sell their products at fair and competitive prices by providing them with real-time price and market information while facilitating their access to financial institutions for loans and financing opportunities.

Dr Adam intimated that the Ghana Incentive-based Risk Sharing System for Agricultural Lending (GIRSAL) to de-risk agribusiness financing by Ghanaian financial institutions, and thereby increase lending to the agricultural sector also remained a laudable initiative to boost the agriculture sector as well.

The AAFORD project, he added, has the objective of improving productivity, income and resilience of smallholder farmers, vulnerable women, and the youth. That objective, he said, would be achieved through increased access to affordable finance in support of better market linkages, sustainable and climate change-adapted agricultural intensification, skills, and enterprise development in agricultural value chains, supporting inclusive policy engagement and building on women and youth potentials as untapped resources for family resilience.

Dr Amin expressed the government’s appreciation to IFAD for its continuous effort in supporting programmes aimed at developing the agricultural sector which remains the backbone of the country’s economy.