Kumasi, March 13, GNA – Solidaridad West Africa, an international non-governmental organization (NGO) with expertise in building sustainable and inclusive commodity supply chains has organised a training workshop for staff of Pan African Savings and Loans (PASL), on risks, challenges and opportunities in financing smallholder farmers in the cocoa sector.
The goal was to equip the staff of PASL with the skills and knowledge needed to properly assess the credit needs of smallholder cocoa farmers and to structure appropriate credit for them.
Mr. Kwadwo Boadi Mensah, the Business Incubation Officer of Solidaridad, noted that “financial institutions are reluctant to lend to smallholder farmers due to the risks associated with primary agriculture and the high transaction cost involved in lending credit to these farmers”.
He said, to help reduce the cost associated with lending credit to smallholder farmers, Solidaridad and PASL together with a cocoa farmers’ cooperative, Kookoo Pa, co-created and piloted the Akuafo Loan – a loan product targeted at cocoa farmers, belonging to village savings and loans associations.
He added that the “village savings and loans associations provide smallholders with the opportunity to establish good savings and credit history, key factors for lenders when it comes to making credit decisions”.
Mr. Mensah said following the successful piloting of the Akuafo Loan, it had become necessary to equip staff of PASL with the skills needed for the scale-up phase.
He spoke of plans by Solidaridad to reach out to 50,000 cocoa farmers in the next five years and said six more financial organizations had expressed interest to join PASL to give loans to the farmers.
He described the loan recovery rate as “very encouraging”, hovering around 98 per cent during the peak season.
“The story so far has been very satisfactory, that is why we have a number of financial institutions now willing to adopt and roll out the Akuafo Loan to cocoa and oil palm farmers.”
Mr. Isaac Nuako, Head of Credit at PASL, said so far the partnership with Solidaridad had been successful and as such the company would extend the facility to many more farmers.
He announced that since the partnership in August 2018, a total of GH?6.7 million had been disbursed to some 3,375 farmers.
Mr. Nuako said PASL had planned to extend the facility to 10,000 farmers in the next two years.
Many financial institutions are reluctant to lend to farmers as a result of the high risks involved, compared with other sectors.
GNA