SADA bank to give farmers long-term credit - CEO

The Chief Executive Officer of the Savanna Accelerated Development Authority (SADA), Charles Abugre, has said that establishment of the Savanna Investment and Development Bank is a move to assist farmers have access to medium to long term financing.

Speaking to the B&FT on the sidelines of a programme held in Accra to draw up a road map for the operations of the Authority, Mr. Abugre said short term financing has proven to be inimical to the operations of farmers and has been the reason farmers are unable to pay back loans, which is why SADA has initiated the establishment of the bank.

themed: “Accelerate Transformation of the Northern Savannah Zone Through Agriculture”,

“One of the problems we have is that all the universal banks lend their money over the short term, but agricultural takes a longer period to become productive enough to be viable. So that is what we are trying to sponsor the Savanna Investment and Development Bank,” he said.

“The idea is to create a largely private-sector-owned entity with a bit of public sector participation. It is going to be a wholesale bank which will mobilize money to provide long term capital and lend it to banks so that the banks will in turn lend it to farmers over the medium to long term,” he added.

Concerns have however, been raised on the sustainability and success of the programme as previous interventions by the Authority have proven unsuccessful; with many farmers unable to pay back their loans, compounded by corruption scandals that hit the organization in 2013 in which a reported amount of GH?32million was unaccounted for.

“The strategy now is we are taking SADA out of delivering inputs to the farmers. This is because as long as you have a government body delivering inputs to the farmers, you are never going to have your money back, he said.

“So SADA want to rather solve the underlying problems which is: how farmers can farm whole year round with irrigation; how they can access medium to longer term loans, and how inputs can be available—which means the warehousing necessary for private input suppliers to be able to make the inputs available and accessible to farmers. Those are the problems we are now looking forward to solve,” he added.

Meanwhile, the Public Accounts Committee (PAC) of parliament on Monday, summoned SADA to clarify issues of financial impropriety, including its inability to recover a US$1million loan advanced to Human Construction Engineering group wasteful expenditure of about GH?187,000 on a trip to Turkey and GH?69,000 on an unapproved trip to Birmingham and Berlin, among others.

Commenting on this development, Mr. Abugre admitted that it will be difficult and impossible for all the money to be fully recovered, since some of the farmers lost their capital due to poor weather conditions that hampered crop yield.

“We will be able to recover some but certainly not all because it is the experience of everybody who has tried to provide financial support to small scale farmers. Our farmers are dependent on rain. So in one year they are successful because the rainfall was consistent; another year they are not because there was little rainfall.

So no matter how hard they work, our small scale farmers cannot be commercially profitable enough to pay back the loans. For small scale farmers to become commercially viable for the future, we have to focus on irrigation so they can farm all year round,” he said.