The high interest rate on credit in the country is a major hindrance to private sector investment in agriculture, the Chief Executive Officer (CEO) of the Ghana Chamber of Agribusiness, Mr Anthony Morrison, has said.
According to him, the current interest rate, which ranges from 30 to 42 per cent, is the highest in the sub-region and described the situation as a disincentive to agricultural financing.
Mr Morrison, who was speaking at a national dialogue in Accra last Thursday to discuss ways to promote investments in food and agriculture in the country, advocated a reduction in the interest rate on borrowing for agriculture-related businesses, to a single digit to enhance investment in the sector.
The dialogue, organised by the Food and Agriculture Organisation (FAO), in collaboration with the Ministry of Food and Agriculture (MoFA), and the Alliance for a Green Revolution in Africa (AGRA), was on the theme: “Promoting investments in food and agriculture; recognising the gains and future perspectives by government and the private sector.”
“We should regard agriculture as a competitive business and put in measures that will attract investment. Key among them is to reduce the interest rate to a single digit as it pertains in other African countries,” he emphasised.
While commending the government for introducing the Planting for Food and Jobs (PFJ) initiative, which had led to increased yields, Mr Morrison underscored the need for the introduction of market-oriented policies to complement the programme.
According to him, existing policies focused so much on production, compared to marketing, thus contributing to the increasing rate of post-harvest losses suffered by farmers.
The CEO of the Private Enterprise Federation (PELF), Nana Osei-Bonsu, expressed concern about the “multiplicity of government interventions in the agriculture sector.”
He urged the government to avoid relying on loans and grants in raising revenue to support agricultural activities but rather “cultivate capital mobilisation internally to create a long-term fund for the sector.”
Transforming the economy
The Director General of the FAO, Africa, Mr Abebi Haile-Gabrielle, said efforts by the government to transform the economy could be driven by the agricultural sector, hence the need to increase investments in the sector to enhance the contribution of the sector to the Gross Domestic Product (GDP).
He called on governments in Africa to commit at least 10 per cent of their budget allocations to agricultural activities.
In a speech read on his behalf, the Minister of Food and Agriculture, Dr Owusu Afriyie Akoto, said the government, through the Planting for Food and Jobs and other initiatives, was committed to creating an enabling environment to enhance private sector investment in agriculture.