As government continues to contemplate introducing legislation to force banks to lend to the Agriculture sector, the Ghana Association of Bankers is calling for increased collaboration between public and private sector players to de-risk the sector.
This comes on the back of recent remarks by the Minister of Food and Agriculture, to the effect that the banking sector has not been lending enough to the country’s agriculture sector to support its transformation.
According to the Bank of Ghana’s May 2022 Monetary Policy Report, at 3.5%, the Agriculture, Forestry and Fishing sectors are the second lowest recipients of credit to the private sector as of April 2022.
In an interview with Citi Business News, the CEO of the Ghana Association of Banks, John Awuah said more steps need to be taken to protect the funds of the banks as they lend to the Agriculture sector.
“Before we think about legislation we need to find out the key issues with the sector that makes it very difficult to deepen financial intermediation. If we are able to work together to de-risk the agriculture sector it will be great. Currently, there are no proper instruments to protect the banks.”
“Banks are working with depositors’ money and you don’t want that money going to a sector that presently hasn’t seen much change to its risk profile. We still have significant post-harvest losses and there is no insurance for such losses,” he added.