Rabo Partnerships, with support from the Embassy of the Kingdom of the Netherlands in Ghana assisted GIRSAL to provide technical support on F&A credit knowledge (capacity building) by providing technical support to staff of agribusiness and related departments of GIRSAL’s partner financial institutions. Rabo Partnerships and GIRSAL worked on three thematic areas namely: 1) technical support; 2) a F&A credit curriculum for the banking academy; and 3) commercial support and masterclasses for F&A strategy development. To increase the capacity of staff of F&A departments and financial institutions, Rabobank assisted in the elaboration of F&A credit risk manuals and credit application assessments.
The article was produced by Rabo Partnerships, and summarizes the activities and outcomes of the assignment
Unlocking finance to boost the F&A Sector in Ghana
Creating impact and sustainable change in Food & Agribusiness finance in Ghana
Food & Agribusiness is the backbone of the Ghanaian economy. Agriculture provides employment for about 38.3% of the populace, its contribution to the country’s GDP was 18.5% in 2019 and a major source of food to meet the needs of the populace. Despite this, majority of farmers struggle to make a living for various reasons including limited access to finance, which ultimately impedes the development of the agriculture sector in Ghana.
Addressing the challenges
To overcome these challenges, the Ministry of Finance, in close cooperation with the Bank of Ghana, the Ministry of Food & Agriculture, with financial support from the African Development Bank (ADB), birthed the Ghana Incentive-based Risk Sharing System for Agricultural Lending (GIRSAL) which commenced operations in July 2019. GIRSAL currently operates on two pillars including a knowledge portal for the assessment of credits, and de-risks agricultural financing through issuance of agricultural credit guarantee instruments and technical support and in this way serving as a vehicle to support financial institutions (FIs) to increase lending to the agricultural sector.
Establishing a solid base to unlock finance
To unlock finance and boost the F&A sector in Ghana, Rabo Partnerships with support from the Embassy of the Kingdom of the Netherlands in Ghana assisted GIRSAL to provide technical support on F&A credit knowledge (capacity building) by providing technical support to staff of agribusiness and related departments of financial institutions that are partners in this program. Rabo Partnerships and GIRSAL worked on three thematic areas namely: 1) technical support; 2) a F&A credit curriculum for the banking academy; and 3) commercial support and masterclasses for F&A strategy development. To increase the capacity of staff of F&A departments and financial institutions, Rabobank assisted in the elaboration of F&A credit risk manuals and credit application assessments. The F&A credit curriculum was revised based on best practices and the experience of Rabobank. The optimisation of a F&A strategy into actionable plans for senior management aims at guiding banks in Ghana in the implementation of this framework. The Embassy was happy to support this process since “access to finance has been a central focus in our current programs. This more systemic intervention has been a welcome addition into achieving the overall goal of unlocking finance for agricultural development”.
Using the sweet spot approach to boost the F&A sector
Since the launch of GIRSAL in July 2019, Rabobank has provided strategic advice for the design of F&A sector knowledge documents, sector strategies and specialised trainings. The strategic advice can be used to develop business propositions for product solutions that are tailored to the investments needs of the F&A sector. Participants in the strategic program were introduced to the “sweet spots approach”. This approach focuses on selecting interesting sectors with potential to provide positive long-term outlook which are also interesting for banks. Within these “sweet spots”, outstanding performers are selected. In Ghana this has led to identifying key value chains in the F&A sector such as soya, rice and poultry food chains. The General Manager of Agribusiness at ADB, Mr. Kwame Asiedu Attrams believes that “the ‘sweet spot approach to lending’ is the smartest credit philosophy I have been introduced to this year.”
In addition, specialized trainings based on best practices provide FIs’ high-level executives with know-how to design a profitable and sustainable food and agriculture policy. Another training focused on strengthening the capacity of agriculture loan officers and credit risks managers to perform food and agriculture credit assessments. A buddy system allows for the exchange of knowledge that benefits all. Concretely, Takyi Sraha from GIRSAL is “proud of the increased quality and confidence among bank staff, after having been provided with the tools to better conduct credit application assessments.”
Changing the story and cultivating results
For Takyi it’s simple, “GIRSAL seeks to change the story around the F&A sector in order to help financial institutions better understand F&A businesses”. So far, 95 agribusiness have been supported by FIs in Ghana and an impressive number of loan guarantees have been provided by GIRSAL, a crucial incentive for FIs to invest in the F&A sector and since its inception in July 2019, GIRSAL using its credit guarantee scheme has facilitated new lending to agribusinesses to the tune of USD 34 million. Most importantly, GIRSAL is succeeding in its mission, as banks in Ghana which would traditionally shy away from F&A businesses are now expressing their interest in investing in the F&A sector by branching out into new areas in the agriculture sector. With the adequate tools now available, the financing of the F&A sector is more feasible than ever. This is thus unlocking finance which will ultimately create tangible impact and sustainable change, thereby boosting the Food and Agribusiness sector in Ghana in the years to come.
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This article was authored by Rabo Partnerships.