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Rising inflation: BoG calls for resilient and thriving agric sector

Adnan Adams Mohammed

The Bank of Ghana is calling for promotion of a resilient and thriving agricultural and agribusiness sector.

According to the Central Bank agriculture has broader implications on the economy, including price stability, exchange rate stability and generation export revenues from the sector.

The Bank indicates that, inability to address food supply conditions could in the long run threaten price stability in the country. Since May 2021, the inflation data have pointed to gradual increase in food prices, and this trend has intensified in recent months on the back of the recent Russian-Ukraine crises. Food inflation hit 30.1% in May 2022, significantly up from 5.4% in May 2021.

“Recognizing the important role of this sector to the economy therefore, the Bank of Ghana was instrumental in the initiation, design, and establishment of the Ghana Incentive-Based Risk Sharing System for Agricultural Lending (GIRSAL) and continues to support the scheme in various ways”, Second Deputy Governor, Elsie Addo Awadzi said when speaking at an Agriculture Stakeholder Convening and Advocacy Platform Launch, last week.

GIRSAL was designed to be a holistic and integrated system of instruments designed to de-risk the agricultural sector and incentivize banks to lend to the sector to drive agribusiness development, and reduce capital constraints that limit competitiveness.

At the onset, BoG provided ¢200 million seed capital and ¢10 million for the set-up and operational expenses to GIRSAL. However, in June 2018, BoG transferred its equity interest in GIRSAL Limited to the government (Ministry of Finance), but continued to support the initiative in a number of ways.

These include the approval of a zero-risk weighting of credit exposures covered by GIRSAL’s Credit Guarantee Scheme, which demonstrates the confidence the central bank assigns to GIRSAL’s CRG scheme, and thus, improving its credibility and attractiveness to financial institutions.

“Indeed, BoG is an invaluable partner to GIRSAL and looks forward to support its activities, including todays’ launch of an Agribusiness Public-Private Partnership Platform”, she further explained.

“Indeed, BoG is an invaluable partner to GIRSAL and looks forward to support its activities, including todays’ launch of an Agribusiness Public-Private Partnership Platform. This newly created AG Platform should provide stakeholders the avenue to identify key bottlenecks in the agriculture and agribusiness value chain, stimulate discussions, and identify possible solutions to unlock the true potential of this industry”, she added.

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