Parliament ratifies 19.6 million euros KFW loan to support farmers

Parliament on Wednesday ratified a loan agreement of 19.6 million euros between the Government and the German Development Bank (Kreditanstalt Fur Wiederaubau; KfW), to support farmers involved in Phase III of the Outgrower and Value Chain (OVC) Fund.

This follows the successes chalked in the first and second phases of the OVC project, according to a report of the Finance Committee of Parliament.

The OVC III is aimed at deepening the gains of the two phases by improving the incomes of small-scale farmers, thereby contributing to reducing rural poverty.

Dr Mark Assibey-Yeboah, the Chairman of the Finance Committee of Parliament, presenting the report, said: “A total amount of 19.690 million euros is required to finance the Phase of the OVC. Once again, the KfW has agreed to finance this third phase.

“It is this agreement that is currently before this House for approval.”

According to the report, the KfW provided 10 million euros to finance the OVC in 2010; and in 2015 it also provided an amount of 23 million euros to support the second phase.

The Fund, with a target of 6,421, has so far reached a total of 4,610 farmers, which covered 6,657 hectares.

The commodities funded so far are rubber, oil palm, rice, pineapple, cassava, maize-soya-sorghum, cocoa, and maize-poultry.

Dr Assibey-Yeboah stressed that the development of small-scale commercial farms required linkages to profitable markets and production management that ensured that the products satisfied market expectations and legal requirements, such as quality standards and certifications.

The objectives of the project, as outlined in the report, include provision of improved access to medium to long term financing for small-scale farmers and technical operators such as processors, exporters, aggregators, and bulk buyers who, otherwise, would not have had access to such financing from mainstream banks.

It is also meant for the development of out-grower schemes in Ghana; and for the integration of small-holder farmers into commercial agriculture development.

Its terms of financing are project cost of 21.69 million euros; loan amount of 19.69 million euros; grant amount of two million euros; interest rate of 0.75 per cent per annum; repayment period of 30 years; and 10 years grace period at 40 years maturity.

The facility attracts commitment fee of 0.25 per cent per annum and grant element of 61.77 per cent.