High collateral, documentation requirements limiting farmers’ access to finance – PFA

Dr Charles Nyaaba, former director of the Peasant Farmers Association of Ghana (PFA), has highlighted that stringent documentation and collateral requirements imposed by financial institutions are hindering access to credit for smallholder farmers in Ghana. Speaking at the Ecobank-JoyNews Financial Dialogue on September 22, Nyaaba emphasized that these requirements are often not tailored to the varied circumstances and financing needs of farmers, making it challenging for many to secure funding for their agricultural activities.

He stressed that access to finance remains a significant barrier throughout the agricultural value chain, from production to marketing and distribution. Nyaaba pointed out that the extensive documentation required by financial institutions is a major obstacle to obtaining credit, affecting farmers from production to the consumer.

He criticized the uniformity of collateral demands, noting that financial institutions fail to differentiate between different types of farmers and their specific needs. As an example, Nyaaba recounted his own experience when he was compelled to transfer the title of a property to a bank before receiving funds to support farmers, a process costing approximately GH¢30,000.

He questioned how smallholder farmers, especially those relying on inherited family property, could afford such costs to secure agricultural loans. Nyaaba urged financial institutions to adopt a more flexible and inclusive approach to agricultural financing, considering the diverse categories of farmers and their financial circumstances.

He called for adjustments in collateral and documentation requirements, interest rates, and repayment periods to make credit more accessible to farmers, ultimately supporting growth in the agricultural sector.