Managing Director for Ghana Incentive-based Risk-Sharing System for Agricultural Lending-GIRSAL, Mr. Kwesi Korboe has highlighted some reasons why agricultural enterprises lack access to funding.
Speaking on the theme, “Access to finance for Agri-MSMEs; the challenges, and approach to building financial resilience. Mr. Korboe remarked that he wants to dispel the myth that banks will neither lend nor invest in agriculture at the fourth annual KIC Business Booster learning session which took place at the African Regent Hotel on May 5, 2022.
He stated that banks are now aware of agriculture’s resilience and strength. He went on to say that banks lend money not because of collateral, but because the idea is practical and can be funded. Although the project concept is technically feasible, it may not be commercially sustainable, he said.
Touching on reasons why agricultural businesses find it challenging to obtain bank financing, Mr. Korboe noted farmer behavior as a major issue, in which the majority refuse to repay loans and instead utilise the funds for personal needs.
He brought up the lack of transparency in the agribusiness sector, where SMEs hide their loan figures from potential investors for fear of losing the loan. “Character is important in lending and owing is not a crime” he added.
He advised banks to provide a checklist to potential customers so that they are aware of the lending requirements. “The problem with agriculture is that it is time-sensitive. Because most decisions are based on weather and soil preparation, the bank should occasionally allow agricultural enterprises extra time.”
Commenting on accessing bank loans, Francesca Brenda Opoku, CEO of Solution Oasis stated that the difficulty in accessing loans is still there and the paperwork involved can be very intimidating and daunting. She advised entrepreneurs to market their products very well to create access to the market, which will prevent them from chasing banks for loans.