Financial institutions urged to increase agriculture financing

A Deputy Minister of Finance, Mr Kwaku Kwarteng has called on financial institutions in the country to prioritise agriculture financing and allocate more of their loan portfolios to the sector.

He said the average lending to the agricultural sector in the last decade by the financial industry had been paltry 4.5 per cent.

Mr Kwarteng who said this in a speech read on his behalf by the Acting Director of the Real Sector Division of the Ministry of Finance, Bashiru Abdul-Razak at a dissemination workshop on a study on agriculturefinance policies, said the financial industry’s financial allocation to the agriculture sector “is woefully inadequate.”

The study dubbed “Agriculture Finance Policy Analysis in Ghana,” and funded by the United States Agency for International Development (USAID) was to review the background information that has been documented on Agriculture Financing Policy in Ghana, fill in the gaps to make it more comprehensive document for policy information and propose recommendations for policy decision making.

He said agriculture remained a critical sector to the economy and its financing should not be left on the shoulders of the government alone.

“Given the limited resources for the agriculture sector, the private sector support should be deemed as the driver of the growth of the sector,” Mr Kwarteng said.

The agricultural sector, he said employed more than 44 per cent of Ghanaians, generated much of Ghana’s foreign exchange earnings and also provide food for the entire citizenry.

The Deputy Minister said the growth of the agriculture sector had been declining for the past five years due to the low government financial allocation to the sector.

He said the government had outlined a number of initiatives to revamp the sector and mentioned some of them as planting for Food and Jobs, Fertilizer Subsidy Programme, and the Ghana Commercial Agriculture Project.

Mr Kwarteng said the new study would help address financial challenges facing the sector and said the recommendations would be incorporated in future agricultural policies.

Highlighting on the report, Mr Francis Osei who conducted the study said the study, among others revealed that agriculture was largely financed by governments and development partners.

He also said the banks shy away from providing loans to Small Scale farmers due to the high risk associated with small-scale farming.

Mr Osei said the current Insurance Law does not cover agriculture insurance.

Among, other recommendations, he said the Insurance Law should be amended to cover agriculture insurance and also the need for National Policy review on agricultural financing and funding.

Mr Osei stressed the need for ‘smart subsidy programmes,’ and also government should be committed to the 2-003 Maputo Agreement which enjoined African countries to commit ten per cent of their budget to support agriculture.

The Head of Agriculture and Agribusiness Unit of the Ministry of Finance, Mrs Edna Baffoe-Bonnie said the study was meant to come out with solutions to deal with agriculture finance in the country and lauded USAID for sponsoring the programme.