Ghana’s efforts to increase agricultural production and attract more investment will remain limited unless farmers and agribusinesses can access the financing needed to expand their operations.
As government prepares to roll out its US$10 billion New Economy programme, policy analyst with IMANI Center for Policy and Education, Sitsofe Mensah believes the 2027 Budget must go beyond announcing financial commitments and address the structural problems that make agriculture unattractive to commercial lenders.
In his analysis ahead of the Budget presentation, Mensah outlines four critical tests the government must pass to make agricultural businesses more bankable, reduce loan defaults and direct more commercial credit into the sector.
Stop Direct Ministry Lending and Use Development Finance Institutions
Sitsofe Mensah wants government to stop relying on ministries to distribute loans directly to businesses. Instead, he calls for the channeling of at least 70% of productive-sector funding through institutions such as Development Bank Ghana (DBG) and the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL).
He proposes using these institutions to provide first-loss guarantees and finance irrigation infrastructure, while requiring every GH¢1 of public investment to attract at least GH¢3 in commercial bank lending.
This approach, he argues, would use public funds to reduce lending risks and encourage banks to finance businesses they might otherwise consider too risky.
Address the Root Causes of Agricultural Loan Defaults
With agricultural loan defaults reportedly reaching 60.9 per cent, Mensah argues that government must tackle the risks that make farmers and agribusinesses struggle to repay their loans.
He recommends linking agricultural support to practical risk-reduction measures, including irrigation, weather-indexed insurance and electronic warehouse receipts through the Ghana Commodity Exchange. He also wants government to extend its recent efforts to clear contractor arrears to payments owed under food buffer and school supply contracts.
The objective is to protect agricultural businesses against weather shocks, storage and market difficulties, and delayed payments.
Power the 24-Hour Economy Before Taxing It
Mensah argues that government cannot expect pharmaceutical, textile and other manufacturing businesses to operate around the clock if electricity remains expensive and unreliable.
He therefore wants the 2027 Budget to provide exemptions or deferments on import duties and upfront VAT for commercial solar inverters, battery storage systems and factory equipment imported through Tema Port.
Such measures, he believes, could lower the cost of investing in alternative power sources and help factories operate additional shifts without depending heavily on diesel generators.
Build Digital Infrastructure to Make Businesses Bankable
His fourth proposal is for government to treat Digital Public Infrastructure as an essential foundation of the New Economy programme.
The analyst argues that linking the Ghana Card, digital land registries and Ghana Revenue Authority e-invoicing systems could help banks assess the creditworthiness of thousands of smallholder farmers and small businesses.
He identifies the National Data Exchange (NDX) as particularly important, arguing that it should provide affordable and efficient access to information rather than become another revenue-generating channel through costly verification fees.
The Bottomline
The analyst believes Ghana must make agricultural businesses as attractive to lenders as import and trading businesses. He argues that moving agriculture’s credit parity ratio from 14% towards 50% by 2030 will require more than public spending: it will require reducing the risks that keep banks away from the sector.
