Making agriculture attractive to financiers and the younger generation

A significant proportion of the global population increase beyond the seven and half billion mark can be attributed to Sub Saharan Africa. That part of the continent has over 16.6% share of the global increase and has the highest rate of growth of 2.55%.

These increases result in the demand for more food, raw materials and other agro based products. Incidentally, the resources of land and water as well as human capital available for agricultural production and agribusiness are limited and continue to decline in quality and quantity year after year.


Meanwhile, the struggle of economies to move up the development trajectory comes with increasing urbanisation, sophistication, changing life style, taste and preferences with their own impact on demand. Two thirds of the world’s population is estimated to live in urban cities by 2050.

The phenomena stated above calls for new approaches to agriculture that will lead to a more efficient growing, managing, harvesting, processing, distributing and consumption of food and other agricultural produce.

In Ghana, the contribution of agriculture to the economy is tremendous with the major impact seen in the areas of employment, foreign exchange earnings, and providing raw materials for the industrial base as well as feeding the population.

There is however a general lack of appropriate farm infrastructure to support large scale farming and post-harvest activities. Production has been largely primary and on subsistence basis with little value additions. The secondary value addition and processing is dominated by small scale operators largely SMEs operating as sole proprietors. The agricultural value chains are underdeveloped and in some cases non-existent.

It is general knowledge that agriculture is plagued with many challenges especially in developing and emerging economies. Should I ask of what the challenges that keeps our agriculture in the current state are, I will readily be presented with:

Low productivity- declining yield, Huge post-harvest loses, Low profitability, Declining growth rates in the sector and Domination by aged or aging practitioners in the sector.

The agricultural sector which still employs over 60% of the labour force in Ghana and sustains the livelihoods of more than two-thirds of the population, is increasingly becoming unattractive to the current generation and the more vibrant segments of the nation’s labour force. Young people view agriculture as a dead-end career that entails life-long labour on a farm. Similarly, the sector is perceived as a high risk sector for financing.

The sector has the potential to grow with the emergence of industrial level off-takers for agricultural products as raw materials and the concerted efforts to improve infrastructure as well as mitigate the risks in the sector to attract private capital, debt financing and the youth into agribusiness.

With the right investments to support entrepreneurs in agriculture, profitable careers can be built in agriculture. Key to this is access to land, access to finance, technology and skill set.

Surmounting the prevailing impediments and delivering quality and affordable food and other agro based products while creating jobs and promoting sustainable livelihoods require new breed of entrepreneurs in the agricultural sector who are:

  • business minded to handle agriculture as business;
  • innovative to identify opportunities along the agricultural value chain;
  • ready tap and apply improved technologies for either production, aggregation and post-harvest management, processing, as well as distribution of good or provision of service to actors;
  • willing to invest time, energy and other resources in the enterprise for a longer term;
  • building their capacity, invest in Research and Development to operate and succeed with their niche; and
  • positioning the business to attract external investment or other financiers to participate

Governments and other development partners need to invest in the institutions and infrastructure that inspire the new generation of agripreneurs. To this end, government should continue to institute policies and interventions to boost growth and participation in the sector. The current intervention is aimed at leveraging the potential of the agricultural sector to promote industrialization through agro-based enterprises across the country. The “Planting for Food and Jobs”, programme, revitalization of the buffer stock company operations and creation of market using the school feeding programme are some measures to provide incentives.


Financing Agriculture

Access to finance remains crucial in starting and growing agribusiness. Financing can make all the difference between success and failure in agricultural business. While inadequate financing has been identified as a major contributor to agribusiness failure, the nature of financing and its timeliness both have significant impact on the success in agriculture


While investments in general infrastructure for agriculture are handled by central government with the support of development partners, the two major sources of financing for agribusinesses continue to be debt and equity.


Agribusiness, like any other, go through a life cycle from early stage, growth stage, mature stage and decline stage. Each phase of the cycles creates its own financing needs and issues. Appropriate financing mix is necessary for growth and sustainability.


Equity financing from primary owner or equity investors is most ideal at the formative stages of agricultural businesses. This is supported with borrowing from creditors including financial institution.


Pooling resources from your own sources and partners who share in your agribusiness operation should be the starting point for any agricultural venture, as this requires a more patient capital investment. It is better to own 10% of GHS 10m business that is healthy than to own 100% of GHS 50m business that is non-performing.


The financial institutions will continue to provide the needed financial intermediation to support farmers and other businesses in the agricultural sector.


Agricultural sector in Ghana has been under served with finance over the years with less than 20% of banks in Ghana truly involved in agriculture financing. Stanbic Bank Ghana remains one of the leading financial institutions actively operating in the Agricultural financing landscape in Ghana. With a dedicated desk for agricultural finance; the bank has directly supported the agricultural sector with GHS 500m over the period dedicating 18% of the Business Banking Loan portfolio to agriculture in 2017. To deepen its participation and tap into state policy interventions to catalyze the sector for accelerated industrialisation, the bank is revolutionizing its strategy to aggressively increase her share in the agricultural financing space from 7% to 14% in the short term.


Specific areas of Focus and Risk Appetite Approach

The need to increase value of our agriculture and improve returns to the agribusinesses is imperative and requires active development of the value chains and increase shelf life through processing as well as promoting access to market. These needs and the direction of state policy has informed the appetite and focus of the bank going forward. The drive is towards activities in the downstream, secondary and upstream segments of the agricultural value chain. Mechanization, technology deployment and input supply as well as agro-processing are prime areas of support from the bank to the agricultural sector. This is complimented with support for stock management and warehousing. Commercialisation of cassava, grains and soy processing as well as horticulture and poultry remain high on the agenda.

We are adopting integrated approach with the use of targeted value chain actors such as mechanization service providers, aggregators and processors with out-grower and credit input supply schemes to be able to serve the financing needs of smaller agricultural value chain actors.

Our strong collaboration with stakeholders in the Agricultural sector as well as development partners and NGOs enhances our capacity and minimize the risks associated with extending financing to the sector

Building the capacity in financial institutions is critical and we continue to reinforce our understanding of the industry through training and leverage on the experience at our parent Standard Group level to deliver quality services to agribusinesses.

Financial intermediation is important for the agricultural sector to flourish and generate jobs and decent source of livelihood for players in the sector.  It is equally important for these agricultural entities to be positioned as bankable entities to attractive financing for their operations.

With the right investment and incentive environment, agriculture can turn a profit and be an attractive venture and Stanbic Bank remains a reliable partner in this transformation.



The writer is the Manager, Agric Desk Stanbic.

Leave a Reply

Your email address will not be published. Required fields are marked *