Lending to the Agricultural sector in Ghana accounted for 5 per cent of total lending by the banking sector as at the end of July 2014, Mr Peter Trenchard, a Director at the United States Agency for International Development (USAID) in Accra has said.
Mr Trenchard who is the Economic Growth Office Director at USAID, made the disclosure in his presentation at a roundtable event on agriculture and food security organized jointly by the Ghana News Agency (GNA) and the United States (US) Embassy in Accra.
He said commercial banks in Ghana were yet to understand the agricultural sector, and that a USAID-FinGAP survey in 2013 suggested that lending to the crop sector other than cocoa was between a mere one per cent and two per cent.
Mr Trenchard cited poor recovery rates, high risks and relatively high administrative costs as some of the reasons for low lending to the agricultural sector.
He said USAID and FinGAP were seeking to address these challenges through capacity building, risk mitigation and the provision of incentives.
As part of the incentive, he said, USAID-FinGAP was allocating up to $1.3m in grants to motivate private financial institutions (PFI) for incremental agricultural lending.
?These incentives may be used in activities supporting Agribusiness lending including Staff capacity development, Establishment of Agricultural Desks and Purchasing of computers, vehicles?, he said.
He added that PFI capacity building would lead to improved human capital, enhanced skills, better appraisal of proposals, good loan recovery prospects, and Informed credit decisions.
Mr Fenton Sands, a Senior Food Security Specialist with the USAID indicated that goals envisaged at the end of USAID-FinGap Project include sustainable financing for agribusinesses, while accomplishing 25 strategic partnerships in target value chains, and 250 transactions developed by project advisors and BAS providers.
Furthermore, $75 million will be made available in finance facilitation, whiles 90 small/medium enterprises (SMEs) and farmer organizations will be linked to 120,000 smallholder farmers in target value chains gaining access to finance.
Mr Victor Antwi, an Agribusiness Opportunities Development Unit Manager for USAID-FinGAP, also made a presentation at the forum on how farmers could make the most out of agriculture as a lucrative business enterprise.
In his remarks Dr Bernard Otabil, the General Manager of GNA who facilitated the event, said rather than allow rural farmers to continue to engage in subsistence farming they should be supported to approach agriculture purely as a commercial venture to enable them to benefit from their toil.
He also stressed the importance of agricultural extension workers in agricultural production chain, saying that technical information on the right use of chemical fertilizers and insecticides was crucial to the attainment of food security if it was made available to farmers at the right time.
Dr Otabil lauded the high level of co-operation between the GNA and the US Embassy that culminated in the success of the event, and expressed the optimism that more of such collaborative efforts would be forthcoming in the course of next year for the benefit of Ghana?s agricultural sector.
The roundtable which had as its theme: ?Improving agricultural production, marketing, distribution and market price information?, was also attended by officials from the U.S. Embassy in Accra, representatives of civil society organizations, USAID-FinGAP, NGOs and the media.
Topics presented included ?The role of competence based training in agricultural development?, ?Effective marketing and distribution systems as catalyst to achieving food security?, and ?Market price information: Using ICT and basic phones in improving farmers? income and livelihood?.