The Ministry of Food and Agriculture is seeking legislation that will make it compulsory for lenders to dedicate at least 20 per cent of their loan portfolios to the agriculture sector.
The move is to overcome banks’ reluctance to extend credit to the agriculture sector.
The Minister of Food and Agriculture, Dr Afriyie Owusu Akoto, said the banks needed to help in the development of the agricultural sector.
The ministry, he disclosed, is currently awaiting approval from the Cabinet to design the policy that will make it compulsory for banks to set aside a certain percentage of their loan books to finance the agricultural sector.
“Over the last decade, lending to agriculture by financial institutions averaged 3.5 per cent. A proposal for legislation requiring commercial banks to increase loanable funds to agriculture has been sent to Cabinet. When approved, we will go to parliament with a bill to make a law that can compel banks in the country to, at least, earmark 20 per cent of their loans into the agricultural sector,” he said.
The minister, who was speaking at a business forum organised by the Association of Ghana Industries (AGI) in Accra, said the move had become a necessity as banks continued to shy away from financing agribusinesses with the excuse that the sector was too risky.
Commenting on the minister’s announcement, AGI president, Dr Humphrey Ayim-Darke said: “It is laudable, it is good, and we will support it fully to ensure that each commercial bank sets aside a certain percentage of their loan portfolio to support the agricultural sector”.
The forum was on the theme: “Resuscitating Ghanaian industries to address the current economic challenges, the trend and the way forward – aimed to discuss practical actions the government was taking to support industrial development in these difficult times. –GNA