Ghana and Germany have signed two financial co-operation agreements, to support the implementation of the national budget, and provide long-term financing for agricultural activities.
The two agreements, under International Development Association (IDA) concessional terms, and worth 40.1 million Euros, were signed on Wednesday by the Minister of Finance, Mr Seth Terkper and Mrs Birte Schorlemmer, the Country Director of KfW Development Bank Ghana, ancillary of Frankfurt-based KfW Development Bank (KfW Entwicklungsbank).
Mr Terkper recounted the long-standing relationship between the two countries, and commended Germany for her generous contributions towards Ghana's development.
Mrs Schorlemmer said the financing agreement was “in line with its commitment over the years to support the Ghanaian government to develop a vibrant and prosperous economy.”
The first agreement is the Multi Donor Budget Support (MDBS X-XI) which involves the provision of 17.31 million Euros under IDA concessional terms, to support the implementation of initiatives in the 2015 budget.
Majority of it are in the social services sector intended to improve the living conditions of rural and deprived communities.
The second agreement, which is the Out-grower and Value-Chain Fund (OVCF II), involves the provision of 23 million Euros to support the development of out-grower schemes in various value-chains and via local banks, so as to provide long term financing to enable farmers to expand their agricultural activities and provide ready market for their produce by linking them to credible off takers.
“Even though the potential of Agriculture to catapult the Ghanaian economy into higher levels of growth is a widely acknowledged fact, access to long term sustainable finance remains a challenge as it is across several other markets due to the perceived high level of risk posed by the sector to lending institutions. It is this challenge that the fund seems to mitigate”, Mrs Schorlemmer said.
KfW Development Bank said its total commitment to the MDBS programme, which it has been funding along with nine bilateral and multilateral donors since 2003, came to a total of about 140 million Euros between 2004 and 2015.
The bank also said this latest OVCF agreement, represented the second phase of a programme which commenced in 2010, and brought the total commitment so far to33 million Euros in loans and 2 million Euros in grants.
KfW Development Bank is Germany’s leading development bank which carries out Germany’s Financial Cooperation (FC) with developing countries on behalf of the Federal Government.