Ghana CARES Program Leverages Interest Rate Subsidies to Stimulate Agriculture and Agribusiness

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In the wake of the COVID-19 pandemic, the Ghanaian government introduced the COVID-19 Alleviation and Revitalization of Enterprises Support (Ghana CARES) program. This program was initiated to aid in revitalizing and transforming the Ghanaian economy, significantly disrupted by the pandemic. A crucial component of this initiative is the Interest Rate Subsidy (IRS) program which provides a 50% subsidy on interest charges on qualified agribusinesses loans advanced to in selected value chains and activities.

Since 2019, GIRSAL has successfully built a strong and influential position within the agribusiness financing support services arena, establishing relationships and growing influence with several financial institutions. Recognizing GIRSAL’s demonstrated experience and valuable relationships with FIs, the Government of Ghana, via the Ministry of Food and Agriculture (MoFA), chose GIRSAL in 2021 to take on the critical role of Scheme Manager for the implementation of the IRS program.

The targeted value chains for this program include tomato, rice, soybean, and poultry (broiler) sectors. The IRS program offers a 50% interest rate subsidy on loans given to these agribusinesses by partner financial institutions under the IRS Master Agreement. The selection of these value chains aligns with both the government’s strategic plan for import substitution and GIRSAL’s 5-year strategic plan focusing on Food Security, Import Substitution, and Export-oriented Value Chains.

As of June 2023, The IRS program has facilitated interest subsidies totalling 3.76 million Ghana cedis. This assistance, provided via participating banks, has benefited 12 agribusinesses across six (6) regions, through reduced loan interest.

Financial institutions such as Stanbic Bank, Ecobank, Absa Bank, Fidelity Bank, Republic Bank, and ADB Bank have joined the scheme by signing the GIRSAL IRS Master Agreement.

The IRS Program provides substantial support with a coverage limit of 10 million Ghana cedis over a five-year loan repayment period. This program inclusively accommodates both existing loan facilities guaranteed by GIRSAL new loan applications submitted to our partnered banks.

To ensure the efficient use of program funds, the GIRSAL team, in collaboration with officials from the Ghana CARES Coordinating Unit at the Ministry of Food and Agriculture (MoFA) and the Ministry of Finance (MoF), conducts regular field visits to the beneficiary agribusinesses. These visits aim to observe operations, identify challenges, and provide actionable recommendations for business performance enhancement. This diligent monitoring approach forms part of GIRSAL’s operation in the GIRSAL Credit Guarantees Scheme (CRG) offered to the banks to accelerate lending to agribusinesses.

By nurturing agribusinesses and providing an enabling environment for their growth, the IRS program aims to enhance food self-sufficiency, reduce food import bills, and increase exports while driving inclusive growth in the agricultural sector.