High collateral, documentation requirements limiting farmers’ access to finance – PFA
The former Director of the Peasant Farmers Association of Ghana (PFA), Dr Charles Nyaaba, says excessive documentation requirements by financial institutions are limiting farmers’ access to financing for agricultural activities.
Dr. Charles Nyaaba, former Director of the Peasant Farmers Association of Ghana (PFA), has highlighted that stringent documentation and collateral requirements from financial institutions are hindering farmers, particularly smallholders, from accessing credit. Speaking at the Ecobank-JoyNews Financial Dialogue on September 22, Dr. Nyaaba noted that these requirements often do not consider the diverse circumstances and financing needs of farmers, making it challenging for many to secure funding for their agricultural activities.
He emphasized that access to finance is a major obstacle across the agricultural value chain, from production to marketing and distribution. Dr. Nyaaba stressed that the documentation required by financial institutions poses a significant barrier to securing credit throughout the agricultural cycle. He pointed out that financial institutions frequently fail to differentiate between various types of farmers and their unique financing requirements when evaluating loan applications.
Dr. Nyaaba shared his own experience, recounting that even after years of helping farmers access agricultural inputs, he faced demands such as transferring property titles to banks before receiving financing for farmers. This process, he noted, can cost up to GH¢30,000, a significant amount for smallholder farmers who often rely on inherited family property as their main asset.
He questioned how these farmers could afford such expenses to obtain agricultural loans. Dr. Nyaaba urged financial institutions to adopt a more flexible and inclusive approach to agricultural financing, considering the different categories of farmers and their specific financial situations. He urged lenders to review their collateral and documentation requirements, along with interest rates and repayment periods, to make credit more accessible for farmers.
He stressed that agricultural financing must align with the realities of farming and farmers' needs to foster sector growth.
Written by urgent.news from Joy Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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