Ghana’s commercial banks have developed a deep and widening preference for lending to the services sector over agriculture, with analysis by The High Street Journal putting the credit gap between the two sectors at GH₵710 billion, a disparity that the Peasant Farmers Association of Ghana (PFAG) says requires urgent and deliberate policy intervention.
Wepia A. Awal Adugwala, National President of PFAG, said while the imbalance is not new to organised farmers, its current scale demands structured government action. He traced the roots of the problem to three overlapping barriers: weather risk, weak value chain structures, and the near-impossibility of meeting standard collateral requirements.
Bank credit to the agricultural and manufacturing sectors has persistently declined over the past 25 years, while the services sector averaged 20.7 percent of bank credit over the same period, compared to just 5.8 percent for agriculture. Adugwala said this trajectory reflects a rational but ultimately damaging calculation by lenders, as Ghana’s near-total dependence on rain-fed agriculture, combined with increasingly unpredictable weather patterns under climate change, makes crop failure a recurring risk that banks are unwilling to absorb.
The services sector continued to receive the largest share of loans from Ghana’s banking sector as of February 2026, followed by commerce and finance and manufacturing. Agriculture did not feature among the leading recipients.
The second structural barrier, Adugwala explained, is the absence of formalised value chains. Banks typically require off-take agreements, binding contracts specifying a buyer, volumes and prices, before approving agricultural loans. For the overwhelming majority of smallholder farmers who operate informally and outside commodity exchange systems, meeting that condition is practically out of reach. He described the sector as “not well structured” in terms of value chain organisation, making it difficult for lenders to assess and price risk using conventional methods.
Collateral presents a third and equally steep obstacle. Most smallholder farmers hold no formal land documentation, and the cost of obtaining title deeds places formalisation well beyond their means. Without property records that banks treat as security, farmers remain excluded from the lending system regardless of the commercial viability of their operations.
The Bank of Ghana (BoG) has approved GIRSAL guarantees as acceptable collateral for commercial banks, carrying a zero percent risk rating and providing banks with cash-backed protection against agricultural loan defaults of up to 70 percent coverage. However, as reported separately, PFAG says the institution’s activities have not penetrated smallholder communities in any meaningful way.
Adugwala called on government to task the Agricultural Development Bank (ADB) with developing special lending modalities tailored to smallholder farmers, including a dedicated desk for that purpose within the bank. He has renewed PFAG’s call for disbursement channels to be extended through rural banks and Ghana Commercial Bank (GCB) to reach farming communities beyond the reach of formal financial institutions.
Many PFAG members, he noted, are located in rural areas where no ADB branch exists, making direct access to the institution practically impossible without such intermediary arrangements.
Adugwala has stressed that smallholder farmers supply between 70 and 80 percent of all foodstuffs sold in Ghanaian markets, making their economic viability not a sectoral concern but a matter of national food security. Without a state-led intervention to bridge the credit access gap, he argued, the smallholder farming base will remain trapped in a low-productivity cycle that ultimately undermines Ghana’s food security and its ambitions for agricultural transformation.
