The Ghanaian government has unveiled a new agricultural insurance scheme aimed at reducing risks in the sector and encouraging financial institutions to provide loans to farmers, boosting productivity. The Ghana Agriculture Insurance Scheme (GAIS) will subsidize insurance, making it less risky for banks to provide credit, enabling farmers to expand operations and enhance productivity.
Food and Agriculture Minister Designate, Mr. Eric Opoku, who announced explained that due to the rain-fed nature of Ghana’s agriculture, banks typically hesitate to lend to farmers.
Mr. Opoku further emphasized that with insurance coverage, banks would be more willing to offer loans, as they would be assured that loans within the insurance limit would be paid. In 2022, the previous sector minister, Dr. Afriyie Owusu Akoto, proposed legislation for banks to allocate at least 20% of their loans to agriculture, but no progress had been made.
Mr. Opoku also acknowledged the historical challenge of credit access, citing how Dr. Kwame Nkrumah established the Agricultural Development Bank in 1965 to provide credit for agricultural development. He reaffirmed the government’s commitment to improving access to credit for farmers, while also linking them to processing companies and markets for their products.
He proposed strengthening the connection between agriculture and industry, so that agriculture could supply raw materials for industries, which would add value, create jobs, and reduce food waste in Ghana. He said these during his vetting in Parliament.
Vetting Committee member Mr. Frank Annoh-Dompreh encouraged the Minister to learn from countries like India, Kenya, and Zambia, where similar schemes had been successful. He also suggested involving actuarial scientists to assess the risks in the sector and provide practical solutions for the insurance scheme.
