Production, market risks and poor records constrain agricultural lending – GIRSAL

Samuel Yeboah, Chief Operating Officer of the Ghana Incentive-based Risk-sharing System for Agricultural Lending (GIRSAL), has highlighted production challenges, market volatility, and inadequate business records as major obstacles to financing Ghana's agricultural sector. Speaking at the Ecobank-JoyBusiness Financial Dialogue Series on September 22, Yeboah explained that banks often face genuine risks in agriculture that can impact farmers' production, earnings, and loan repayment capabilities.

Production and market uncertainties, such as inadequate rainfall, crop diseases, and unpredictable commodity prices, significantly affect farmers' output and ability to repay loans. Farmers often base production decisions on expected market conditions but are often left struggling to sell their produce due to heavy imports or market disruptions.

Inadequate business records, particularly from smallholder farms, also complicate loan assessments as banks struggle to understand the financial performance and creditworthiness of these agribusinesses. To overcome these challenges, GIRSAL stresses the importance of conducting due diligence and obtaining proper documentation of farmers' production volumes, sales, yields, and revenue over multiple production cycles.