Business News of 2014-04-01

Banks urged to change perception about agric sector

Banks have been called upon to change their perception about agricultural financing by devoting a more sizeable amount of their loanable funds to help transform the ailing sector.
According to the co-founder of Blue Skies, a prominent fresh fruit exporter, Mr Seth Dei, banks have wrongly tagged the agricultural sector as risky but noted that the banks needed to take up that risk and devise strategies to mitigate its impact on their business while helping to grow the sector.
Speaking as the host of the 11th edition of the MTN/Business World Executive Breakfast meeting in Accra, Mr Dei threw a challenge to the banks to employ people with deep knowledge about the agricultural sector to be in charge of their agric financing departments.
“The agricultural sector can be a risky sector to finance but it is the responsibility of the banks to find solutions to mitigate those risks,” he said, adding, “until such is done, the sector will continue to remain as it is”.
Although the banking industry is thriving, it is not clear how it is helping to grow some of the very critical sectors of the economy, particularly agriculture which is estimated at employing more than 60 per cent of the workforce in the country.
While banks refuse to provide support for Small and Medium Scale Enterprises (SMEs) in the country, they are also not interested in agric financing using the excuse that those sectors are too risky to venture into.
The stance of the banks confirms the assertion held by many that they are only interested in buying government securities such as Treasury Bills and bonds while refusing to take risk that could help accelerate the development of the country.
This assertion may be true considering the huge profits the banks are recording in spite of the very harsh economic conditions which has badly affected industry and the agricultural sector of the economy.
Many analysts have argued that, the banks in the country are a contributory factor to the decline of some of the real sectors of the economy because they deliberately advertise prohibitive interest rates while refusing to provide funds for the growth of those sectors under the guise that they are risky.
Over the years, banks are acquiring universal licences leaving none specially focused on growing major sectors of the economy. For instance, the Agricultural Development bank (ADB), which was set up specifically to provide funding for the agric sector has also acquired a universal licence and is venturing into areas which are not really related to its aim.
The National Investment Bank (NIB) also seem to have lost its focus by engaging in other areas other than its core while the other specialised banks such as the Bank for Housing and Construction among others have folded up. According to Mr Dei, there was the need for what he described as massive education to change the perception people have about agriculture being a preserve of illiterates.
He noted that for those in the sector to succeed, the role of the banks would be key because they would require financing to be able to achieve the needed success that would inure to the benefit of the country. “Train farmers to do research and educate them on the findings. Education is key to change agric,” he said.