By: Emmanuel Amoah
Over the past five years, the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) has disbursed approximately GH¢1.8 billion in loans at relatively lower interest rates, benefiting 137 agribusinesses across 72 districts in 15 regions of Ghana.
Additionally, GIRSAL has issued credit guarantees worth over GH¢604.53 million to 17 financial institutions, covering up to 70 percent of credit default risks within the same period.
These milestones were shared by Dr. Ernest Addison, Governor of the Bank of Ghana (BoG), during GIRSAL’s fifth-anniversary celebration in Accra. The event was themed ‘Cultivating Growth – Five Years of Empowering Ghana’s Agriculture through Innovative Finance and Technical Support.’
“In its operations, GIRSAL identified untapped potential in the rubber industry and facilitated the entry of local processors by providing key financial incentives. This helped mitigate perceived risks, encouraging local participation and growth within the sector,” Dr. Addison said.
As a result of GIRSAL’s intervention, the rubber industry has generated permanent employment opportunities and created an annual income of GH¢3.5 million for rural households. The program has also empowered 451 local smallholder rubber farmers and service providers, contributing a total of GH¢30 million per year in income to over 12,600 individuals. Moreover, the rubber sector’s contribution to export revenue reached US$8 million annually.
Dr. Addison emphasized that the Bank of Ghana launched GIRSAL five years ago as an innovative solution to promote agribusiness growth and enhance agricultural financing. Since its inception, GIRSAL has made significant progress in providing credit risk guarantees and related services to financial institutions, ultimately increasing agricultural lending.
He further noted that agricultural financing plays a crucial role in Ghana’s development strategy, given that agriculture contributes about 24 percent to the country’s GDP and employs around 40 percent of the workforce. With food accounting for 43.7 percent of the items in the consumer basket, the agricultural sector remains a key driver of inflation and food security.
Ghana’s reliance on food imports, which averages about 10 percent of total imports or approximately $1.4 billion annually, also highlights the importance of developing the sector. Dr. Addison explained that strengthening agriculture could significantly reduce the food import bill and help conserve foreign exchange reserves.
“By promoting local food production through import substitution, Ghana can reduce its dependence on food imports. Moreover, through export promotion, the country has the potential to become a major food exporter, boosting foreign exchange earnings,” he added.
However, despite agriculture’s importance, Dr. Addison acknowledged that many participants in the sector continue to face significant challenges in accessing finance. High interest rates, combined with collateral requirements that are difficult to meet, hinder many agribusinesses. The sector is also exposed to risks beyond the control of value chain actors, necessitating the need for accessible insurance schemes, which are often unavailable.
