Business News of Saturday, 8 December 2018
The Agricultural Development Bank (ADB) and Ghana Commodity Exchange (GCX) have signed a Memorandum of Understanding (MoU), whereby ADB will provide a range of financial services including warehouse receipts financing, aggregation financing and settlement of trades.
The Bank will lend to Ghanaian smallholder farmers who only have their commodity as sole collateral to present to the bank as security for a loan. The GCX on its part, as part of its operations, will provide a first-class warehouse collateral management service, warehouse Insurance and Indemnities, as well as stock information and market prices to reduce the bank’s lending risks.
This is in line with the government’s resolve to ensure financial inclusion among rural communities largely dominated by smallholder farmers.
At the recent inauguration of the GCX, the Minister of Finance, Ken Ofori-Atta, hinted that ADB will be restructured to support Ghanaian farmers through the warehouse receipt system.
Speaking at the MoU signing, the Managing Director of ADB – Dr. John Kofi Mensah, stated that the Bank is fully committed to supporting farmers improve their access to financing. The Bank is a major player in the implementation of the Planting for Food and Jobs and One District, One Factory agriculture-related projects, and the MD stressed the need for fair pricing modules to assist the entire agric value chain.
On his part, the Chief Executive Officer of GCX – Dr Kadri Alfah, expressed optimism that the partnership between the GCX and ADB will go a long way to assist smallholder farmers, as well as help to promote the GCX model.
He stated: ‘’Agricultural Development Bank has an extensive network of branches with proximity to commodity production areas, which suits our business model and perfectly supports our warehouse receipts financing programme.
“ADB’s readiness to support the GCX electronic warehouse receipt programme is good for the country and the financial market’s environment, as we can see a collaborative effort among institutions with a national focus work to meet a collective need.
It is important that we encourage more commercial banks with enormous private capital to take an interest in smallholder farmers who contribute about 20% of our GDP, and are responsible for almost 50% of our employment. But, of course, we need to help the banks manage their default and credit risks.’