Agriculture plays a crucial role in Ghana's economy, contributing significantly to the country's Gross Domestic Product (GDP). Despite its enormous growth potential, only 4% of bank loans are directed towards the sector. To tackle this challenge, Ghana Incentive-Based Risk-Sharing System for Agriculture Lending (GIRSAL) has set up a Technical Assistance Facility aimed at increasing financial institutions' lending to the agriculture sector. This is achieved through training programs and study tours that enhance their knowledge of agriculture and Agri-financing.

GIRSAL recently partnered with the Development Bank Ghana (DBG) to sponsor a study tour for seven Ghanaian bankers. The tour was fully sponsored and aimed at enabling participants to learn from Kenya's VegPro Group, a renowned player in the sector. The selected participants were drawn from the 2022 Agriculture and Agribusiness Lending Training cohort, based on their exceptional performance in an essay challenge that tested their knowledge of the agricultural sector.

The Agriculture and Agribusiness Lending Training Course provides extensive training on agriculture and agribusiness financing to financial institution professionals such as agriculture desk officers, relationship managers, credit risk officers, and credit analysts. The course is delivered in partnership with the National Banking College, with DBG's support. Since its inception, 439 staff from 27 institutions have participated in the training course. GIRSAL and DBG have jointly funded four training cohorts since 2022, with two more scheduled for 2023.

These interventions are examples of programs meant to deliver on the mandates and strategic aims of the sponsoring partners, GIRSAL and DBG. GIRSAL’s mandate is to de-risk agricultural financing and to stimulate increased lending from financial institutions to the agricultural sector. The institution also provides technical support to financiers to assess, structure and manage agric loans. DBG, on the other hand, supports financial institutions to provide long-term funding and advisory services to Ghanaian businesses and still is committed to accelerating inclusive and sustainable economic transformation by fostering the growth of a competitive private sector.

About VegPro Group

VegPro Group is a leading agribusiness firm in Kenya that has been in operation for over 30 years. The firm has a strong horticultural division which produces, processes and exports fresh produce and flowers for export to the UK, Europe, and parts of Asia. Gorge Farm, one of VegPro’s subsidiary farms, produces a wide range of vegetables, fruits, and flowers and uses waste products to produce energy through its biogas operation. VegPro’s Nairobi processing facility employs over 1600 staff, mostly women and runs a 24-hour shifts system to meet export demand.

Learning from VegPro’s Successes

The team visited VegPro's processing and packaging facility, and their freight forwarding subsidiary, Freightwings Ltd, located within the Jomo Kenyatta International Airport Enclave.

During the tour, the participants saw the well-coordinated process of receiving vegetables and other farm produce from VegPro’s Gorge Farm, which goes through processing, packing, and packaging for export to meet specific client specifications and requests. The excess food waste generated daily due to rejected products is sold on the local market, while the waste products are used to power the farm's biogas plant.

During the trip, the team also visited VegPro's Gorge Farm in Naivasha, a sprawling property spanning approximately 2600 acres and specializing in the production of a diverse range of vegetables, fruits, and flowers, primarily for export. The group toured the farm's biogas plant, the largest of its kind in East Africa, with a capacity of 3.4 megawatts, which converts waste products generated during harvest and processing into electricity and liquid organic manure. The tour also included a visit to the greenhouses and shade-netted houses where crops like chili pepper, different varieties of green pepper, avocado, flowers, and other fruits are grown for export.

Furthermore, the participants were able to see the grading process for freshly grown flowers, which involves sorting and grouping based on size, colour, and variety. The blooms undergo rigorous quality checks to ensure only the finest are selected before being cut, stripped, and packaged according to client specifications.

Overall, the study tour exposed the team to modern agricultural processes, technologies, and practices. They gained valuable insights into the importance of agribusiness financing and how financial institutions can support Ghanaian agribusinesses to thrive. The experience provided the participants with greater exposure to commercial and large-scale agriculture.

Upon the conclusion of the trip, several participants shared their invaluable experiences and observations.

Rita Offeibea Ackom, Head of Agri-Fund at OYA Capital Limited, praised GIRSAL for providing a remarkable on-the-job learning experience. She emphasized that agribusinesses require well-structured management and a dedicated workforce to achieve success. Furthermore, banks, advisories, and finance houses must have a comprehensive understanding of the entire value chain, from input to market. Ackom commended GIRSAL for taking the bold step of helping financiers understand this, adding that the private sector must also play a role in creating an enabling environment for Ghana's agricultural businesses. By doing so, she believes the sector can generate more jobs and foreign exchange revenue that is vital to the economy.

Jackson Akadaare Anagbila, a Relationship Officer at CBG (Consolidated Bank of Ghana) Bolgatanga, called on Ghana's banking sector to pay closer attention to agriculture and design products that offer friendly lending regimes to the agric sector. He believes that this would make it possible for Ghana to transition from a taxation-driven economy to a production-driven one, with agriculture serving as the growth engine. Anagbila also emphasized that Ghana has much to learn from Kenya's agriculture, particularly around greenhouse agriculture, and that the country must harness the power of nature, nurture, technology, and people to achieve its production goals.

Daniel Benonzaol Tiere, Manager of Portfolio Quality, Commercial, and SME, described the study trip to VegPro Group as an enlightening experience. He was amazed by how technology has been integrated into the farming process to produce high-quality agricultural products. Tiere also found it fascinating that VegPro has a Pack House located at the airport to ease the export of their fruits and vegetables, showing their commitment to efficiency and prompt delivery.

VegPro's zero-waste policy impressed Tiere during the study tour. Waste products from harvesting are converted into liquid organic manure to reduce the use of chemical fertilizers. Other wastes are used as manure for plants during land preparation, promoting sustainable farming. Tiere was especially impressed by the 3.4-megawatt biogas plant, which generates electricity for the farm and feeds any excess energy into the national grid.

Improving Agriculture Financing

In conclusion, the study tour to Kenya's VegPro Group sponsored by GIRSAL and DBG provided valuable insights into the operations of a leading large-scale commercial agribusiness. The bankers gained practical knowledge and experience that will help them support Ghanaian agribusinesses and increase lending to the sector. Initiatives like these are crucial to the growth of the agricultural sector in Ghana and will help the sector reach its full potential as a driver of economic growth and development.