Ghana’s banking sector has developed a pronounced and widening preference for lending to the services industry over agriculture, with the credit gap between the two sectors now estimated at GH₵710 billion .
The disparity was uncovered by The High Street Journal through its analysis of sectoral credit allocation patterns. Wepia A. Awal Adugwala, National President of the Peasant Farmers Association of Ghana, noted that while the imbalance is not new to the Association, its current magnitude calls for urgent and deliberate policy intervention.
Adugwala acknowledged that banks have long considered the agricultural sector a high-risk lending environment, citing what he described as the sector being seen as a “risky area” by financial institutions. He pointed to Ghana’s heavy dependence on rain-fed agriculture as a central concern for lenders, noting that in the era of climate change, the inability to predict rainfall patterns makes crop failure a recurring risk that banks are unwilling to absorb. The consequence, he argued, is a systematic exclusion of farmers from the credit market, one that has compounded over the years without a meaningful structural remedy.
Adugwala also identified the lack of formalised value chain structures as a second major barrier. Banks, he explained, require farmers to secure off take agreements which are binding contracts that guarantee a buyer, including agreed volumes and prices, before approving loans.
For smallholder farmers operating informally and largely outside commodity exchange systems, meeting such conditions is practically impossible. He described the sector as “not well structured” in terms of the value chain, making it difficult for lenders to assess and price risk in the conventional manner.
The Association’s president was equally critical of the collateral requirements imposed by private sector banks. Most smallholder farmers, he noted, do not hold formal land documentation, and the cost of obtaining such documentation places it well beyond their reach. Without the title deeds and property records that banks typically demand as security, farmers find themselves locked out of the lending system entirely, regardless of the commercial viability of their operations.
Adugwala called on the government to task the Agricultural Development Bank with developing special lending modalities tailored specifically to the needs of smallholder farmers. He proposed the establishment of a dedicated desk within the bank for this purpose, with credit disbursed through partner rural banks and GCB Bank to reach farming communities in areas where ADB has no physical branch presence. He noted that many of the Association’s members are located in rural communities where no ADB branch exists, making direct access to the institution practically impossible.
The Association’s position is that without a state-led intervention to bridge the credit access gap, the country’s smallholder farming base, which he estimated accounts for between 70 and 80 percent of all foodstuffs sold in Ghanaian markets, will remain trapped in a low-productivity cycle that ultimately undermines national food security. Adugwala framed the issue not merely as a sectoral concern but as a matter of economic transformation, arguing that a nation serious about agricultural development must ensure that its farmers can access the capital they need to grow.
