Ghana government announces insurance to derisk loans for farmers

The government has announced the introduction of an insurance scheme to reduce the risk in Ghana’s agriculture sector, making it attractive for financial institutions to provide loans to farmers to enhance productivity.

Mr Eric Opoku, the Food and Agriculture Minister, disclosed this when he appeared before Parliament’s Appointments Committee for vetting, announcing the Ghana Agriculture Insurance Scheme (GAIS).

He explained that because the country’s agricultural sector was rain-fed, banks usually hesitated to offer credit to farmers, indicating that the scheme would subsidise insurance to derisk lending.

Mr Opoku noted that the implementation of the insurance scheme would, therefore, allow banks to offer credit to farmers to expand their farming activities and increase productivity.

“Once you have the insurance, the banks are ready to advance loans to you, knowing very well that whatever amount they give you, so long as it falls the limit of the insurance, it can be paid,” he said.

In 2022, the then sector Minister, Dr Afriyie Owusu Akoto, announced the submission of a proposal for legislation to Cabinet for banks in the country to, at least, earmark 20 per cent of their loans to agriculture but nothing has been heard yet.

The Food and Agric Minister nominee noted that it was the challenge of access to credit that Dr Kwame Nkrumah (Ghana’s first President) in 1965 established the Agric Development Bank to provide credit facilities for the development and modernisation of agric.

He pledged the government’s commitment to ensuring that such measures were enhanced to address the challenges farmers faced, while connecting them to mini processing companies as well as ready market for their produce.

“We will establish a strong relationship between agriculture and industry, so that as agric provides the raw materials, industry, will be adding value. In so doing, we will generate a lot of jobs and reduce food losses significantly in our country,” he noted.

Mr Frank Annoh-Dompreh, a member of the Appointments Committee, urged the Minister to learn from countries like India, Kenya and Zambia, where similar agricultural insurance schemes had been implemented to guide Ghana’s scheme rollout.

Mr Annoh-Dompreh, who studied agriculture at the University of Cape Coast (UCC), asked the sector minister nominee to involve actuarial scientists to assess the risk and uncertainty in the sector and provide workable solutions.

Source: GNA

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