Chief Operating Officer of Ghana Incentive Risk-sharing System for Agriculture Lending (GIRSAL), Takyi Sraha, has revealed that his outfit has guaranteed loans of up to GHC392 million to some eighty agribusinesses in the country in the last two years.

According to him, GIRSAL has made significant contribution to agric insurance within the country. Commenting on the injection of some GHC400,000,000 by the Bank of Ghana into GIRSAL to benefit farmers, Mr Sraha explained that although the initial capitalization was supposed to be GHC400,000,000 they were barely in operation then. As a result, he indicated that Bank of Ghana provided them with some “GHC200,000,000 and government also got a facility [of] $13.6 million from Africa Development Bank”.

“So, roughly at inception, we were GHC270 million and we’ve grown that capital close to GHC400 million now and in terms of impact, because we don’t lend directly to agribusiness or to the banks for on-lending, we provide the guarantee. So, our funds are usually in investments and using the guarantee. We’ve guaranteed loans worth GHC392 million within the last two years for benefiting over 80 agribusinesses”.
Takyi Sraha

Expounding on the responsibilities of GIRSAL, Mr Sraha expressed that it was set up by the government as a private company, wholly owned by government and capitalised by Bank of Ghana and also with a facility from Africa Development Bank. He noted that the main role of GIRSAL is to “de-risk lending” to the agric sector by financial institutions to stimulate growth via the use of a very simple model.

“So, as an agribusiness requiring a loan facility, you approach your bank and once your loan application goes through the bank approval processes and it’s approved and they require support, then they come to us as a guarantee institution to provide guarantee on the loan that the bank is providing to the agribusiness. So, at GIRSAL our primary stakeholder is the financial institutions and we provide that kind of comfort to the financial institution to lend to the agribusiness”.
Takyi Sraha

The guarantee, Mr Sraha indicated, is to ensure that in an unlikely event that the facility goes bad, the banks can make their way to GIRSAL for claims and the “guarantee is up to 70%” of the principal loan amount.

Education on Agric insurance in the country

The COO of GIRSAL intimated that although insurance within the agric sector is barely talked about, institutions such as Agric Insurance Pool has been set up by government and it is providing insurance to farmers and other agribusinesses. In terms of awareness among the beneficiaries who are mainly farmers, Mr Sraha noted that some farmers are aware of the insurance policy. He explained that particularly the phenomenon is not new to farmers who require insurance especially, smallholder farmers who are into annual crops, poultry farmers and even some tree crop farmers.

On his part, Anthony Morrison, Chief Executive Officer for the Chamber of Agribusiness disclosed that the Chamber was part of the key player that was part of the workshop on insurance for agribusinesses some three years ago. He noted that he was expecting that some of the feedbacks and objectives of that validation workshop for the Ghana Agriculture insurance to take off should have materialized by now. Following this, Mr Morrison called for a lot more education to be done with regards to the agriculture insurance penetration in the country.

“A lot more people are not aware and even do not understand how insurance can help to de-risk some of the credit facility they go in for and I think that GIRSAL stated it clearly. So, there’s much more to be done but on the side of government, more work has to be done with regards to actualizing the policy itself because the policy is the framework on which the private sector will actively participate in the insurance industry”.
Anthony Morrison