Lending to the Ghanaian agricultural sector has generally been low, compared to other sectors. This has been attributed to the high risk associated with the sector, among other reasons. Interventions such as Ghana Incentive-Based Risk Sharing System for Agricultural Lending (GIRSAL) ’s agricultural credit risk guarantee and technical assistance have been introduced to de-risk and stimulate more investment into the sector.
GIRSAL introduced the Agriculture and Agribusiness Lending Course for Financial Institutions in 2020 in collaboration with the National Banking College. The program is designed to enhance financial institutions’ agricultural knowledge, improve their capacity to assess agricultural loan applications, and structure and manage agribusiness lending. The course is part of GIRSAL’s technical assistance facility and is expected to help stimulate increased lending to the agricultural sector. A total of 262 mid-level staff from 24 financial institutions completed various course modules between August 2020 and September 2021.
The positive feedback received by participants indicated that the course is relevant and has been effective in demystifying the agriculture sector and the prevailing perception that the agriculture sector is “high risk.”
Development Bank Ghana (DBG) and GIRSAL are co-funding three (3) additional training cohorts between August and December 2022. Training sessions began with 55 participants from 12 financial institutions at the National Banking College on 9th August.
The two-module course covers Ghana’s agribusiness environment, value chains, agriculture insurance, and agricultural loan appraisal techniques. It is targeted at agriculture desk officers, relationship managers, credit risk officers, and credit analysts. The course also includes a practical field visit.
The DBG is a critical partner for GIRSAL with the former, set up to provide long-term wholesale financing, credit guarantees, and other services to financial institutions to increase overall lending to priority sectors, including agriculture. This aligns with GIRSAL’s overall objective of supporting financial institutions to increase lending to agriculture. Given our shared mandate, knowledge, and experience in agricultural financing, GIRSAL will provide technical support to assess agricultural loan applications submitted to DBG, support applicant PFIs to identify risks, structure financing opportunities, and issue credit guarantees.
Both organizations will also collaborate to provide capacity-building and innovative interventions to improve agriculture financing in Ghana. The MOU was signed in March 2022.
DBG is a Development Finance Institution that acts as an enabler for businesses in Ghana and as a long-term capital provider in the market. It ensures that sustainable, global best practices are applied across its operations. DBG has the vision to accelerate inclusive and sustainable economic transformation by fostering the growth of a competitive private sector.