Agric financing woefully inadequate –Andani
Agriculture contribute to about 33.5% of Ghana's GDP and employs about 65% of the country's workforce yet this all important sector is the most troubled in the country.
Access to timely credit for small holder farmers who constitute the majority in this all important enterprise has become the bane of that sector.
The GDP of Ghana is reported at 16.7 billion and agriculture is supposed to be contributing some 5.5 billion to that figure but total credit in terms of loans advances reported to the sector in Ghana is just about 6.8 billion Ghana Cedis and this include forestry and allied areas accounting for only 5.1% of GDP .
This according to Mr Alhassan Andani Managing Director of Stanbic Ghana is aclear mismatch and needs urgent remedy, considering a sector that is contributing 33.5% and having credit of just 5.1%.
He said this at a round table media conference organized by stanbic bank in Accra yesterday.
It is for this reason that in Ghana mostly the financial sector get blamed for agriculture but said it is time to get back to the philosophy of agriculture financing.
To this end the bank is looking at increasing access to help develop the entirety of the value chain of agric development in the country.
As part of its commitment to this cause, The bank has instituted an Agricultural Guarantee Fund Scheme which is an innovative fund for Africa's smallholder farmers and was created by a partnership between Standard Bank, the Alliance for a Green Revolution in Africa (AGRA), OPEC Fund for International Development, Kilimo Trust, Millennium Challenge Account Mozambique, Ministry of Agriculture Mozambique and The Millennium Development Authority.
Initiated in March 2009, the US$100 million scheme aims to reach about 750,000 small farmers and small and medium-sized enterprises in Ghana, Mozambique, Tanzania and Uganda over three years. Under the scheme, the partners provide a Risk guarantee while Standard Bank provides the funding for lending. This partnership is the single largest facility targeting smallholder agriculture by a bank.
The aim of the scheme is to open up access to finance for the agricultural sector in Africa as this has been a major constraint to unlocking the potential of agriculture on the continent. Financial institutions have been reluctant to lend to this sector for a number of reasons, including the remoteness of clients, the lag between investment needs and expected revenues, lack of usable collateral, and high risks due to environmental factors such as weather, pests, diseases and price.
According to Mr. Andani, Ghana has a system that is not coordinated with any statistics to drive production to meet demand.
Stating that 'People would have to understand that if you are providing finance into agriculture we have to move away from the liaise affair, small holder approach to market to farm approach'
He reiterated that there is need for supply chain management and market dynamics management which takes into account, when does the market need the product and in what quantity at what price the farmer is at the mercy of the market.
'for that matter financing becomes a bit difficult, that is the kind of challenge standard bank is trying to correct by engaging stakeholders to try to develop an average financing that follows a sensible value chain that is derived from the market and is able to line up all the actors in the process so that every body knows what role to play at what time in the year long activity from the farm right up to the market.'
According to him agriculture in Ghana required a long term financing to be able to develop the sector more effectively adding that it is high time Ghana developed a sustainable institutional support into financing the development of agriculture.
Clive Tasker, CEO of Standard Bank Africa Standard Bank was also delighted that the bank is one of the strategic partners of the African Green Revolution Forum (AGRF), to be held from September 2-4 in Ghana at the Accra.
According to him ,Standard Bank is particularly pleased to see this conference finally being held on the rich soil of Africa as it is this soil that holds the world's greatest potential to successfully address the pressing needs of global food security.
The forum is a public-private-sector led initiative aimed at forging increased co-operation to drive the development of a sustainable Africa Green revolution. The theme of the forum is 'Investing in African Agriculture'. The forum will also seek to drive transformative change through partnerships to unlock Africa's agricultural growth potential.
It is estimated that about 40% of the world's reserve agricultural land is in Africa and therefore needs the expertise of organisations such as Standard Bank to turn that land into a tool to alleviate poverty and bring about food security and sustainable development on the continent.
Jacques Taylor, head of agricultural banking at Standard Bank Africa has also emphasized that 'History has taught us that it is public-private partnerships that can drive growth on the on the continent. Our partnerships with different players in the agricultural sector have allowed us not only to open up access to finance to small farmers in Africa, but also to facilitate skills transfer, mentorship and capacity building in terms of human resources, infrastructure and land development.'