In a significant move to boost agricultural financing in Ghana, GIRSAL has signed a Memorandum of Understanding (MoU) with CalBank PLC to strengthen the bank’s capability to handle and finance agricultural businesses, primarily by facilitating the establishment of an effective agribusiness unit dedicated to processing agricultural loan applications.
This strategic partnership comes at an opportune time when banks are displaying increased interest in extending credit to agribusinesses due to GIRSAL’s Credit Risk Guarantee scheme available to partner financial institutions.
Mr. Kwesi Korboe, the CEO of GIRSAL, and Mr. Carl Selasi Asem, Deputy Managing Director of CalBank, sealed the agreement, which envisages a marked rise in CalBank’s agric portfolio target to roughly 15% of its total credit portfolio over the next two years.
GIRSAL, through this partnership, will contribute technical expertise, mentoring, and other necessary support during and post-setup of CalBank’s new agric unit. The arrangement also encompasses specialized training for selected staff members in diverse agricultural value chains, sector comprehension, and effective agricultural credit risk assessment, thus accelerating the bank’s progress towards its target.
While GIRSAL has an established history of training financial institution staff in agriculture and agribusinesses, this partnership introduces a specialized focus. Chosen staff for the agric unit will undergo intensive training, benefit from expert knowledge shared by GIRSAL, and an understudy attachment, all aimed at amplifying CalBank’s lending prowess in the agriculture sector.
This partnership is significant for GIRSAL because it reinforces the company’s commitment to increasing access to credit at lower interest rates, improving the quality of agricultural lending, and expanding its reach to provide more support to the agric sector.
This partnership with CalBank forms part of GIRSAL’s wider Technical Assistance Facility, a comprehensive initiative designed to empower financial institutions in overcoming challenges linked to agricultural financing. This technical support includes direct coaching, mentoring, technical expertise advisory services, and information resources aimed at fostering a greater understanding of the complexities inherent in agricultural lending. This hands-on support has enabled many banks to expand their agricultural loan portfolios, with some venturing into lending to agribusinesses for the first time.
Under this facility, GIRSAL’s agricultural experts collaborate with financial institutions, providing assistance during the pre-application assessment phase of loan requests from agribusinesses. This meticulous process, which involves due diligence visits to agribusiness farms and recommending suitable risk mitigation measures, ensures a comprehensive evaluation of the technical feasibility, financial viability, and potential risks of each application.
Mr. Carl Selasi Asem, CalBank’s Deputy Managing Director, explained how the bank had previously been hesitant to extend credit to agribusinesses, due to a knowledge gap in the sector. “We have shied away from lending to the agricultural sector due to limited knowledge. Now, with GIRSAL’s support and guidance, we are confident we can effectively lend to the sector. GIRSAL is an ideal partner as they understand the objectives and needs of the banks, and they advocate for necessary actions. Their support is invaluable,” Asem noted.
Mr. Kwesi Korboe expressed his enthusiasm for the strategic alliance, highlighting its potential to drive substantial growth and development in the agricultural sector. He reassured CalBank of GIRSAL’s unwavering commitment to realizing the partnership’s goals: establishing an effective agricultural unit and boosting CalBank’s agric credit portfolio by 15% within two years.
About CalBank: CalBank PLC is a leading Ghanaian banking institution providing comprehensive banking and financial solutions to a broad spectrum of clients, including large corporations, small to medium-sized enterprises, and individual retail customers.