In a bid to tackle the challenge of limited access to financing in the agribusiness sector, a new initiative called the ‘Affordable Agricultural Financing for Resilient Rural Development (AAFORD)’ project has been launched.
This substantial project, valued at US$69 million, has a primary objective: to enhance agricultural productivity, boost incomes, and strengthen the resilience of smallholder farmers, particularly vulnerable women and youth.
These objectives will be realized through the expansion of access to cost-effective financing, enabling better marketing connections, the adoption of sustainable and climate-smart practices, skill development, and the advancement of enterprises within agricultural value chains.
AAFORD will implement a targeted inclusive policy that aims to harness the untapped potential of women and youth to bolster family resilience. This initiative is led by the Ministry of Finance and is financially supported by the International Fund for Agricultural Development (IFAD).
The project will employ a value chain partnership approach, concentrating on fostering profitable connections between agricultural producers, buyers, and collaborating financial institutions. It will promote business models that facilitate linkages between households and buyers (nucleus farmers, processors, and aggregators), thereby increasing household incomes.
Partner financial institutions will benefit from agricultural credit guarantees, agricultural insurance initiatives, capacity-building in agricultural lending, and access to concessional credit funds and incentives from the AAFORD-supported Blended Finance Facility (BFF) to reduce the interest rates on agricultural loans.
The AAFORD project aims to directly serve approximately 75,000 impoverished rural households and indirectly benefit around 465,000 individuals within smallholder households. In total, over 540,000 rural individuals engaged in small-scale agriculture are expected to gain from this project. The project will focus on specific geographical regions, including the Northern, Savannah, North-East, Bono, Bono East, and Ahafo Regions.
The target crops encompass cassava, sorghum, maize, soybeans, millet, and groundnuts. Additionally, depending on opportunities, the project will also support vegetable value chains such as tomatoes, peppers, cabbage, carrots, and eggplants that are relevant to smallholders. High priority will also be given to import substitution crops like rice.
Dr. Amin Adams, the Deputy Minister of Finance, officially launched the project in Sunyani, the capital of the Bono Region. He praised AAFORD as a critical component of the government’s efforts to boost agricultural productivity and enhance the livelihoods of individuals involved in the value chain. Dr. Adams also highlighted the positive impact of previous government policies like ‘Planting for Food and Jobs,’ ‘Planting for Exports and Development (PERD),’ and ‘Ghana Incentive-based Risk Sharing System for Agricultural Lending (GIRSAL)’ in improving the agricultural sector and reducing poverty in rural areas. He extended his commendation to IFAD for its ongoing support of government programs aimed at agricultural sector development.
“Since 1980, IFAD’s interventions have supported a range of programmes in Ghana; focusing on areas such as agricultural productivity improvement, developing rural institutions, marketing through offtaker linkages, supporting access to finance, youth skills development and youth micro-enterprises. These interventions have led to the development of resilient livelihoods for the citizenry. We are grateful for your support and collaboration over the years in bringing a smile to the face of Ghanaian rural folk,” he said.