US$60m credit available to agribusinesses

Rick Dvorin, Chief of Party, USAID-Financing Ghanaian Agriculture Project (USAID-FinGAP), has said there is about US$30-60million available to support efficient agribusinesses in the country to grow and expand.

“There is still US$30-60million in the pipeline. This is the reality. As a project, we have a target of US$75million till 2018. What we do as a project is facilitate financing from financial institutions to agribusinesses through our business advisory providers who package applications, business plans and records of the agribusinesses to present to the financial institutions for financing,” he said.

The USAID-FinGAP is a five-year project with the goal of facilitating finance and investment in the soy, rice and maize supply and value chains in the north of Ghana, and improving ancillary services so that agribusinesses can operate at full capacity and expand levels of food security in the country.

He stated that in the last 18 months, USAID-FinGAP has facilitated the financing of agriculture in Ghana to the tune of US$13.5million. Mr. Dvorin said the aim of USAID-FinGAP projects is to seek to increase household incomes and facilitate lending to farmers.

Mr. Dvorin, speaking at the one-day Ghana Agribusiness Investment Summit 2015, noted that apart from the access to finance, the project is looking at reducing the cost of finance to these agribusinesses as well.

The one-day summit brought together lending institutions, advisory services companies and NGOs working to improve agriculture in the country, and was under the theme “Overcoming obstacles to unlocking agricultural investments in Ghana”.

He urged all financial institutions to continue keeping open minds and perhaps, more importantly, an open cheque book for agricultural financing to manage risk and make good business investments.

Gene Cretz, America’s Ambassador to Ghana, said the U.S. Government through USAID has committed to investing US$250million through President Obama’s Feed the Future Initiative.

“Access to credit has been a major challenge for businesses in Ghana, especially Small and Medium Enterprises. However, the situation is even more severe for the agricultural sector. Only about 4 percent of lending in Ghana goes to the agricultural sector.”

The number of Ghanaians involved in agriculture, according to the ambassador, implies that private sector investment into the agriculture value chains is critical to reducing poverty and spurring economic growth in Ghana. He therefore called for steps to be taken to address the issue of high cost of credit, which is holding back investments into the agricultural sector.

Fiifi Kwetey, Food and Agriculture Minister, noted that Ghana’s economy is dependent on agriculture, which contributes about 22 percent to GDP and is critical to the overall economic growth and development of the country.

“To ensure that agriculture is positioned at the heart of the economy, the Ministry of Food and Agriculture has a policy framework within which it operates and has a manual that translates this policy into action. The entire overall and overreaching objective is to ensure that the private sector takes on the frontline activities, and government focuses on facilitation and regulation where necessary.”

To realise its objective as a ministry, Mr. Kwetey said the ministry has gone out of its way to create the Agribusiness Support Unit as far back in 2012 to respond to the growing need for private sector investment in the agricultural sector.

The unit, he added, also has additional responsibility for facilitating the development of agribusiness by providing technical information and advice on investment opportunities for agribusinesses in the sector.

He stated that government, through MoFA, is also pursuing some initiatives to deepen private sector investment in the agricultural sector -- such as the Grow Africa Initiative to facilitate partnerships between local and foreign agribusinesses and across several value chains.

He appealed for the private sector to comply with existing regulations and seek clarifications with the ministry when in doubt. “This is extremely important to grow our partnership. We are as an institution ready to provide the necessary assistance and ensure that all agribusinesses comply with existing regulations.”