To address the persistent financial exclusion in Ghana’s rural and agricultural sectors, GIRSAL has partnered with CapitalPlus Exchange Corporation (CapPlus) under the Mastercard Foundation’s FIRST+II Program to pilot a $3 million Loan Portfolio Guarantee (LPG) Facility.
This four-year LPG program is designed to empower rural banks and non-bank financial institutions (NBFIs) to provide affordable credit to underserved micro, small, and medium-sized enterprises (MSMEs), with a specific focus on smallholder farmers, women-led businesses, and youth entrepreneurs.
The LPG facility directly addresses two key barriers, collateral requirements and high borrowing costs that limit access to finance for marginalized groups. Unlike GIRSAL’s traditional Credit Risk Guarantee model, the LPG groups borrowers with similar risk profiles, such as farmer-based organizations and cooperatives of smallholder farmers, into portfolios. This approach enables financial institutions to lend more confidently, backed by shared risk coverage.
The guarantee covers up to 70% of losses on loans to smallholder farmers and 50% for other qualifying borrowers, thereby significantly reducing the perceived risk and improving credit accessibility for rural agribusinesses.
The eligible financial institutions for this program include rural banks and NBFIs participating in the FIRST+II program. These institutions are selected based on their geographic reach, commitment to youth employment, and adherence to regulatory standards set by the Bank of Ghana. These institutions are required to allocate at least 50% of their guaranteed loan portfolios to qualifying borrowers, prioritizing youth and women-led enterprises in agriculture and related sectors. These loans under the pilot LPG range from US$5,000 to US$300,000 per group of qualifying borrowers.
In addition to the guarantee facility, GIRSAL will provide participating institutions with technical assistance and advisory services to strengthen their risk management and financial institutions’ resilience, as well as develop a robust monitoring framework to ensure that resources are utilized effectively to achieve the goal of the program.
The FIRST+II Scale-Up Program seeks to contribute to reducing youth unemployment by enabling access to affordable credit for rural MSMEs, often excluded from traditional financing due to small loan sizes or lack of collateral. The program particularly emphasizes on job creation for youth and young women, promoting long-term inclusion and economic empowerment in rural communities.
Commenting on the partnership, Mr. Kwasi Duah, CEO of GIRSAL, stated that
“At the core of GIRSAL’s mandate is the drive to increase lending to agribusinesses. We are therefore happy to partner with CapitalPlus Exchange Corporation under the Mastercard Foundation FIRST+II program, which will enable us to further advance this mission. By de-risking agricultural lending through the Loan Portfolio Guarantee mechanism, we aim to reduce the barriers that prevent MSMEs, particularly youth and women-led enterprises, from accessing the financing they require to grow and thrive in the agricultural sector.”
Over the next four years, GIRSAL will work to demonstrate the effectiveness of portfolio-based guarantees as a transformative tool for expanding inclusive finance. The ultimate goal is to increase the volume and quality of agricultural lending to underserved agribusinesses, particularly those led by youth and women across Ghana.
About the FIRST+II Scale-Up Program
The Financial Institution Resilience and Strengthening (FIRST+II) Program, an initiative of the Mastercard Foundation in partnership with CapitalPlus Exchange Corporation, aims to enhance financial inclusion for youth, especially women, rural micro, small and medium enterprises (MSMEs) in Ghana. By providing business development services to smallholder farmers and entrepreneurs while building the capacity of financial institutions to accelerate finance to them, FIRST+II fosters sustainable economic growth, strengthens resilience, and promotes inclusive development. Through strategic partnerships and innovative financing solutions, the program empowers MSMEs and high-impact enterprises to create and improve jobs for young women and men and contribute to local economies, ultimately improving livelihoods and reducing poverty. For more information, visit first.capplus.org.