Ghana government announces insurance to derisk loans for farmers

Eric Opoku – Minister of Agriculture

The government has introduced an insurance scheme for Ghana’s agriculture sector. This aims to make it easier for banks to lend to farmers. The goal is to enhance productivity in farming.

Mr. Eric Opoku, the Food and Agriculture Minister, announced this scheme during his vetting by Parliament’s Appointments Committee. He introduced the Ghana Agriculture Insurance Scheme (GAIS).

He explained that Ghana's agriculture relies on rain. Because of this, banks often hesitate to offer loans to farmers. The new scheme will subsidize insurance, reducing the risk for lenders.

With this insurance, banks will be more willing to provide credit. Farmers can then expand their activities and boost productivity. “Once you have the insurance, banks are ready to advance loans,” he said.

In 2022, former Minister Dr. Afriyie Owusu Akoto proposed legislation for banks. He suggested they should allocate at least 20% of their loans to agriculture. However, there has been no update on this proposal.

Mr. Opoku noted that access to credit has long been a challenge in agriculture. In 1965, Dr. Kwame Nkrumah established the Agricultural Development Bank for this reason.

He pledged that the government would enhance measures to support farmers. This includes connecting them with mini processing companies and markets for their produce.

“We will build a strong relationship between agriculture and industry,” he stated. As agriculture provides raw materials, industry can add value and create jobs while reducing food losses.

Mr. Frank Annoh-Dompreh from the Appointments Committee advised Mr. Opoku to learn from other countries like India and Kenya. These nations have successfully implemented similar agricultural insurance schemes.

He also suggested involving actuarial scientists in assessing risks in Ghana's agricultural sector for better solutions.