Agriculture finance is critical for eradicating hunger and extreme poverty
Participants at the just ended stakeholder engagement on agriculture financing under the Ghana agriculture investment Plan (GhAIP) have underscored the need to create the necessary enabling environment to attract investment into the agriculture sector.
Access to credit/finance by agri-food sector and actors along the commodity value chains in Ghana is limited not only because of the inherent risk in agriculture but also due to inadequate agriculture financing instruments and lack of a consensus innovative financing model or arrangement for the agriculture sector.
To attract substantial and sustained financial support for the agric sector, there is the need to collaborate with all relevant stakeholders to develop innovative financing models or instruments for the country’s agriculture which will de-risk and eliminate bottlenecks associated with agricultural financing in Ghana.
Transforming the agricultural sector in Ghana
The Government of Ghana is developing its Agriculture Investment Plan aimed at transforming the agricultural sector through a more focused, prioritized and robust plan with emphasis on multi-sectorial linkages for a holistic and structured delivery of results.
When completed and implemented, the Ghana Agriculture Investment Plan (GhAIP) will ensure that the government’s vision of a modernised agriculture culminating in a structurally transformed economy and evidence in food security, employment opportunities and reduced poverty” is achieved. The GhAIP provides a menu of policy tools that will enable the government to harmonize all the interventions and flagship programmes in the sector, align donors’ interventions to Government’s priorities, manage investments for results, effectively leverage private sector investments and account for results.
The business and innovative financing model that is being proposed in the GhAIP along selected commodity value chains needs to be interrogated to allow for the main actors to bring on board their thoughts, realities and experience on the model to drive its successful joint implementation. The financial institutions are pivotal to the overall implementation of GhAIP and the need for their engagement.
Speaking on behalf of the Food and Agriculture Organization of the United Nation (FAO) at the event, the Regional Programme Leader Mr. Ade Freeman noted that at least USD$80 billion would be needed in annual investments to meet the growing demand for food globally.
“There is increasing need to invest in agriculture due to various factors such as population growth, changing dietary preferences of the growing middle class towards higher value food products and climate risks” He said.
The Regional Programme Leader noted that agriculture finance is critical for eradicating hunger and extreme poverty, raising the incomes and economic resilience of food-insecure population that overwhelmingly rely on agriculture for their livelihoods, and providing good quality jobs, especially for the burgeoning youthful population.
Priority programme areas of the GhAIP
GhAIP has four (4) programme areas, namely: Programme Area 1: Sector Administration and Management; Programme Area 2: Crop and Livestock Development; Programme Area 3: Agribusiness Development and Programme Area 4: Sustainable Land and Environment Management.
Programme Area 3 of the GhAIP, Agribusiness Development, aims at creating the necessary enabling environment by government for private sector to invest and grow the Agricultural sector. Increased investment in the sector can be stimulated through increased and sustainable access to innovative financing. Innovative financing instruments such as Agricultural Risk Sharing, Agricultural Finance and Credit Facilities, Capital Market Instruments for Agriculture among others were proposed to crowd in financing from the private sector as well as build an environment of confidence for the financial institutions to provide financing while taking advantage of the inherent opportunities in the sector.
The stakeholder engagement also provided opportunity to financial institutions to share and discuss innovations that will best suit them and put mechanisms in place to allow for their full participation in the implementation of the investment plan.