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

Former Director of the Peasant Farmers Association of Ghana (PFA), Dr Charles Nyaaba, has highlighted how strict documentation and collateral demands from financial institutions are hindering farmers' access to credit. Speaking at the Ecobank-JoyBusiness Financial Dialogue on September 22, Dr Nyaaba, who has worked with farmers across Ghana, emphasized that these requirements do not account for the diverse circumstances and financing needs of farmers.

He pointed out that financial institutions often fail to differentiate between different types of farmers and their specific loan needs, making it challenging for many to obtain funding for their agricultural activities. Dr Nyaaba stated that the extensive documentation and collateral demands placed on farmers create a significant barrier to securing credit, from production to the final marketing and distribution stages.

He cited his own experience as an example, recounting how he had to transfer the title of a property to a bank before being granted a loan to support farmers. The cost of transferring the property alone amounted to approximately GH¢30,000, a considerable amount considering the small loans many farmers require. Dr Nyaaba questioned how smallholder farmers, especially those relying on inherited family property, could afford such costs to secure agricultural loans.

He challenged the feasibility for such farmers to obtain the required GH¢30,000 to transfer the title of their parents' property to access the loan. Dr Nyaaba urged financial institutions to adopt a more flexible and inclusive approach to agricultural financing, considering the varied categories of farmers and their financial situations.

He called for a reevaluation of collateral and documentation requirements, as well as interest rates and repayment terms, to make credit more accessible to farmers and support growth across the sector.