Financing Ghanaian Agriculture Project (USAID-FinGAP) Quarterly Progress Report #5, January 2015

The project aims to address a key constraint that restricts the development of commercial agriculture in Ghana: access to finance necessary to enable investment in agricultural value chains. Using a mix of technical assistance (TA) and financial incentives, the Project seeks to unlock financing for commercial agriculture development in the rice, maize, and soy value chains in the north of Ghana. The project is designed to achieve several outcomes, including the establishment of 25 strategic partnerships in target value chains, 250 financial transactions, $75M in finance, and the linkage of 90 SMEs and farmer organizations to 120,000 smallholder farmers in target value chains gaining access to finance. To achieve these outcomes, USAID-FinGAP employs a value chain approach and partnership-driven model, whereby the Project supports the development of dynamic business advisory service (BAS) providers and participating financial intermediaries (PFIs) servicing the agriculture sector. The project has two integrated components: the AOD Unit, which identifies, develops, and supports agribusinesses for investments through strategic market linkages with investors that integrate SMEs and smallholders to promote equitable participation of farmers in their supply chains, and the FSSU, which facilitates the financing of agribusiness opportunities by working with financial intermediaries, other donors, and GoG programs to provide affordable and sustainable finance and credit. During the quarter, USAID-FinGAP released several significant loans to agribusinesses in the maize, rice, and soy value chains, totaling $5,072,099 in financing. This brings the total financing facilitated by the project to $9,423,844, or 48% of the target for the first two years. The project also developed partnerships with critical Ghanaian institutions that provide risk mitigation services and products to help reduce the cost of agribusiness financing. The project awarded a grant of $150,000 to the Ghana Agricultural Insurance Pool (GAIP) to help the organization market and distribute its agribusiness insurance products to nucleus and commercial farmers, FIs, and agro-processors in the three northern regions. Additionally, the project negotiated with Eximguaranty for a $500,000 award to pay 50% of the 4.5% credit guarantee premium required by the FIs when a loan is provided to an agribusiness in USAID-FinGAP's value chain. The project also awarded incentive grants to 14 FIs, motivating the release of incremental financing to actors in the target value chains. Selected through a competitive process, the 14 selected FIs have committed a total of $31,460,000 in financing to SMiLEs under grants of a total value of $1,320,920. The financing will be disbursed over the 2015 calendar year. USAID-FinGAP's activities are complemented by the award of incentive grants to 14 FIs, motivating the release of incremental financing to actors in the target value chains. The project's Business Advisory Service (BAS) Provider Network has seen an increase in the number of loans submitted to FIs, as well as financing released. The project's capacity building trainings and technical assistance to its approved providers have also contributed to the growth of the network. The project's geographic focus is on the north of Ghana, where it aims to unlock financing for commercial agriculture development in the rice, maize, and soy value chains. The project's timeframes are five years, with the first two years focusing on establishing strategic partnerships and facilitating financial transactions. The project's recommendations include the continued support of the BAS Provider Network and the FSSU, as well as the development of new financial products that best serve the needs of the agribusiness community.