Boost for Agricultural Lending   

…as BoG Approves GIRSAL’s Guarantee as Loan Collateral

By Nelson Ativor
In an exciting development for the agricultural sector in Ghana, commercial banks have received the green light from the Bank of Ghana (BoG) to accept guarantees issued by the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) as collateral for loans to agriculture.
This groundbreaking decision means that GIRSAL’s guarantees can now serve as a valid form of collateral for agricultural loans, marking a significant step forward in facilitating access to finance for farmers and agribusinesses.
Agriculture has long been recognized as the backbone of Ghana’s economy, yet a major challenge faced by the sector has been the lack of adequate funding. Banks have traditionally been hesitant to lend to agricultural ventures due to perceived high risks, unpredictability of yields, and the absence of tangible collateral. However, with the recent policy change by the Bank of Ghana, the outlook for agricultural financing appears poised for a transformative shift.
Ismail Adam, Head of Banking Supervision at the Bank of Ghana, made the announcement during a Banking Roundtable event organized by the 24-Hour Economy initiative on behalf of Governor Dr. Johnson Pandit Asiamah.
This development holds significant benefits for smallholder farmers, agro-processors, and agritech companies, who have often struggled to access credit. With GIRSAL now recognized as a reliable guarantor, these stakeholders can approach banks with greater confidence, knowing that their financing needs are supported by a credible credit guarantee.
The approval of GIRSAL’s guarantees as collateral represents a major milestone in efforts to de-risk the agriculture sector and promote increased lending to support agricultural production and value chain activities.
The move not only enhances GIRSAL’s reputation as a credit guarantee provider but also signals to financial institutions that agriculture projects are now a viable and secure investment option. Future initiatives, such as guarantees provided by the Development Bank Ghana (DBG), are also set to receive similar collateral status, further expanding access to finance for the agricultural sector.
This decision is expected to have far-reaching implications for Ghana’s economy, with potential benefits including higher agricultural productivity, increased agribusiness growth, job creation, enhanced food security, and reduced dependency on food imports. By recognizing GIRSAL’s guarantees as valuable collateral, the Bank of Ghana has taken a significant step towards addressing a key financial barrier hindering the growth of the agricultural sector.
The move represents a positive outlook for agriculture in Ghana, offering new opportunities for economic growth, sustainability, and prosperity in the sector.