The Branch Manager of the Somanya branch of the Upper Manya Kro Rural Bank Ltd has advised farmers to come together to form Farmer-Based Organizations (FBOs) as a way of accessing credit facilities from financial institutions.
Dr. Gabriel Odeh Apotey who spoke in an interview with Rite FM reporter, Prince Paul Amuzu on challenges that affect loan accessibility singled out the lack of collateral on the part of farmers as one hindrance hampering their loan requests.
“As a financial institution, you can never give out a loan without collateral or security,” he said.
According to him, most distressed farmers seeking loans were individual farmers who did not have collateral or belong to any FBO, a situation which made accessing such facilities difficult.
He also rejected the issuance of farmlands by affected farmers as collateral.
“Most farmers do not have collateral to access loans and most of them offer their farmland as collateral. Unfortunately, we cannot use their farming land for collateral purposes because the lands do not particularly belong to the farmers especially as Ghana’s land tenure system is concerned,” he indicated.
Under the existing system, traditional land-owning authorities (stool chiefs, clan heads and skins) hold absolute ownership to land on behalf of their people. Thus outright ownership of land is still a rare form of land tenure in Ghana.
Though the branch manager alluded that appraisal and disbursement of loans “is not a problem to the bank” the main challenge facing the process however has to do with the monitoring and recovering of the loans that they give out to their clients.
Dr. Apotey said the bank in spite of these bottlenecks has consistently advised farmers to form or join Farmer-Based Organizations to serve as group solidarity.
“Because of all these challenges faced by farmers, we have advised them to come together to form groups which can serve as group solidarity that they can stand on as collateral or security to easily access credit facilities from financial institutions since financial institution can never give a loan to any farmer without collateral,” he asserted.
Small holder farmers have to look for alternatives of financing if they are to increase production and upgrade to commercial farming.
This is so because they still find it hard to access agriculture loans from financial institutions.
If farmers can access the money, they can buy equipment to help them in transporting the food from the farm and process it so that they don’t go bad before getting to the market.
Some financial institutions however explained that it is still risky to lend to small holder farmers because most of them lack collateral.
Source: Prince Paul Amuzufirstname.lastname@example.org