Banking Consultant, Nana Otuo Acheampong believes that banks are hesitant to support small scale farmers financially because of the fear that the farmers may not be able to pay back loans given to them.

Critics had claimed that the lack of support from banks may have played a role in the struggles of local rice producers in the country.

But answering the question as to why the banks refuse to give the rice millers credit, Mr. Acheampong said that they refuse to do so to avoid the risk of being in debt after making the right checks.

According to him, debt from the agric sector accounts for a chunk of non-performing loans on the books of banks.

Mr. Acheampong said this on The Citi Breakfast Show on Tuesday.

“It’s an issue of risk in the sense that no bank personally has any money. It’s the savings of you and I that they give out and therefore they have to assess the risk and check that if they give out that loan, it will [certainly] come back. If you go to the Agric sector, you will see that the non-performing loan figures are high even though the pictorial analysis doesn’t give much to Agric.”

“However, the good news for the sector is that the Finance Minister indicated in the budget that the government is going to set up a development bank and will be looking at the Agric sector specifically and help them [the rice millers] with less than commercial rate loans as cheaper loans,” he said.

Background

Yaw Adu-Poku, the convenor of the Rice Millers Association, lamented that banks were unwilling to support millers with loans to run their businesses.

Speaking on Citi TV‘s The Point of View yesterday [Monday], Mr. Adu-Poku explained that rice millers expected a significant uptick in local rice production and started making approaches to banks as far back as February 2019 but their efforts yielded no positive result.

He said: “Unfortunately, the financial houses are not ready to come in especially if you are talking about agro projects. The financial houses across the board are not interested.”

Mr. Adu-Poku complained that, even loan requirements of banks willing to support them are “way over our heads.”

He claimed they are unable to access loan support “because they [Banks] are asking for landed property in the city.”

Local rice farmers need funding support

The “Buy Made-in-Ghana rice” campaign continues to get the backing of relevant personalities and agencies both in the public and private sectors.

One of the latest to join in the campaign is the John Agyekum Kufuor Foundation, which is asking the government to provide the necessary funding to boost local rice production.

Policy Advisor with the JAK Foundation, Nana Ama Oppong-Duah, told Citi Business News that the Foundation believes that an efficient production chain would be established if banks and other financial institutions step in to assist.

According to her, rice is a profitable business that banks can easily recoup their investments once the right structures are put in place in the rice value chain.

Source: Citinewsroom