The Ghana Association of Banks has warned against using law to compel banks to make loans to the agricultural sector.
This follows the Minister of Food and Agriculture’s recent comments that the banking industry hasn’t been lending to the country’s agriculture sector enough to help its transformation.
According to the Bank of Ghana’s May 2022 Monetary Policy Report, the Agriculture, Forestry, and Fishing sectors got credit from banks in the country at a rate of 3.5 percent as of April 2022, trailing only the Mining and Quarrying sector, which received 1.8 percent.
The same report shows that the services sector received the biggest chunk of credit given out by banks at 33.4% a significant jump from 29.4% in April last year.
Speaking on the matter of low credit to the Agriculture sector, in an interview with Citi Business News, the CEO of the Ghana Association of Banks, John Awuah, said free market forces should be allowed to determine where the funds of banks go to.
“As much as is possible we want the market to remain the way it is, allowing the forces of demand and supply to determine where the money goes. Yes, we all believe that lending to the Agriculture sector is critical, and as banks, we also take note of that. And GIRSAL’s data will show that banks have actively been partnering them to increase credit to the sector.”
“We are however not so much in favour of legislating lending. In the unlikely event that something negative happens who do you blame? We need to be very cautious,” he added.
