Business News of 2013-12-08

‘Local banks lack expertise to finance agric projects’

Agribusiness and Value Chain expert, Dan Acquaye, says a lot of Banks in Ghana lack the expertise to review agricultural projects, thus their aversion to financing agricultural projects.

He told Charles Sam, Host of One Nation on Radio XYZ on Friday that a lot of Ghanaian banks see agricultural financing as a risky business because they the lack the know and simply are in a haze about it.

“…They’ll tell you it is risky so they don’t want to. Not that it is risky, they don’t have the expertise; they have the knowhow; they know how to do it”, he said.

According to him, “…the whole banking industry needs value chain financing for agriculture, they don’t know it”.

Dan Acquaye, who has served as a consultant to several local and international institutions including the Millennium Development Challenge (MCC), United States Agency for International Development (USAID), Economic Community for West African States (ECOWAS), Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ), the UNDP amongst a host of others, said banks stand to benefit from agriculture when they venture into financing agricultural projects.

“…If you talk about a sector that employs 70% of the people and you are not financing them, you are not in that sector, then you are missing also a lot of opportunities”.

He says studies show that one of the reasons a lot of banks do not finance agricultural projects in the rural areas is because the farmers do not have collateral and there is no way to track them.

Acquaye also says the other major hurdle is that beneficiaries mistake the loans for a gift and so do not bother paying back.

He therefore wondered why the few banks that finance agricultural projects continue to dish out money to finance several projects belonging to a few people who refuse to pay, at the expense of those with a good track record of repaying their loans.