In addition, GIRSAL in the last five years has issued credit guar­antees valued at over GH¢604.53 million to 17 financial institutions, covering up to 70 per cent of cred­it default risks.

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, disclosed this in Accra on Tuesday during the fifth anniversary cele­bration of GIRSAL. The celebra­tions under the theme: ‘Cultivating Growth – Five years of empow­ering Ghana’s agriculture through innovative finance and technical support.’

“In its operations, GIRSAL recognised the untapped potential in the rubber sector and stepped in to facilitate the entry of indigenous processors. In doing so, GIRSAL provided essential financing incen­tives to mitigate perceived risks thereby inducing local participa­tion and growth in the sector,” he added.

Through this intervention, the Governor noted that the rubber sector had created permanent employment, generating some GH¢3.5 million per year in income to rural households.

GIRSAL, he said also empow­ered 451 local smallholder rubber farmers and service providers, con­tributing a total of GH¢30 million per annum in incomes to 12,616 individuals.

These interventions in the rubber sector, the Governor said generated US$8 million in export proceeds.

Dr Addison explained that five years ago, the BoG conceptualised and operationalised GIRSAL as an innovative strategy to drive agribusiness development in the economy.

“Since then, GIRSAL has made giant strides in providing credit risk guarantees and related services to financial institutions to boost agricultural lending,” Dr Addison explaind.

He said agricultural financing was a critical aspect of Ghana’s development strategy due to the important role agriculture played in the economy, particularly on employment and food security.

The Governor further indicated that agriculture contributed about 24 per cent of GDP and employs an estimated 40 per cent of the workforce, emphasising that de­velopments within the agricultural sector was critical for the econ­omy, given that the weight of the food items in the consumer basket which accounted for 43.7 per cent, hence a major driver of headline inflation.

He added that on the average food import accounted for nearly 10 per cent of total imports, which translated to about $1.4 billion in import value.

Dr Addison said the agriculture sector also held a huge potential to help boost the country’s foreign exchange reserves.

“First, as an import substitution strategy, sufficient food production locally will reduce the food import bill to preserve hard-earned foreign exchange reserves. Second, through the export promotion strategy,” he said.

He noted that, “Ghana could become a major food exporter which will improve the sector’s foreign exchange earning capacity. Clearly, promoting a resilient and thriving agricultural sector will be transformational with broad­er implications on the economy, including price stability.”

Moreover, Dr Addison said notwithstanding the importance of agriculture, the participants in the agricultural value chain continued to face challenges in accessing finance.

He explained that interest rates on loan to actors in agricultural val­ue chain continue to be prohibitive due to the high perception of risks, combined with collateral require­ments that are almost impossible to meet, adding that the sector was also beset with risks that are beyond the control of actors in the value chain, requiring some form of insurance schemes which may be inaccessible in most cases.