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GIRSAL Suggests Credit Guarantees For Fertiliser Subsidy Programs

The Ghana Incentive-Based Risk-Sharing System for Agricultural Lending Project (GIRSAL) is proposing a credit guarantee financing system for future fertiliser subsidy programmes (FSP), to aid growth in the agricultural sector.

GIRSAL’s Chief Executive Officer, Kwesi Korboe – speaking to the media during the company’s assessment of the FSP under government’s Planting for Food and Jobs programme at a stakeholder validation workshop in Accra, said the credit guarantee-backed financing arrangement will tremendously reduce interest costs on fertilisers to farmers.

The commercial letters of credit (LCs), according to the GIRSAL boss, can offer guarantees to sellers that the monies will be paid while assuring customers that no payment will be made until the goods are received. This, according to him, will ensure cost reduction and encourage competition to drive fertiliser prices further down.

The government does not have to pay money to companies for the supply of fertiliser, Mr. Korboe said, adding: “The credit guarantee finance strategy will eliminate rent-seeking”.

Indeed, the FSP under the PFJ has allegedly been dented by rent-seeking – whereby companies have engaged in manipulation of the policy for increasing profits, though the quality of inputs supplied were questionable.

Assessing the fertiliser subsidy impact on farmers, an agricultural policy researcher and advisor who led GIRSAL’s FSP assessment project, Dr. George T.M. Kwadzo, said the entire PFJ programme under which the subsidy programme falls lacks policy coherence.

“The One Village, One Dam Policy and the School Feeding Programme should have been complemented by the FSP through the PFJ. Our evaluation of the policy’s execution, however, did not reveal this policy consistency, Dr. Kwadzo remarked.

Additionally, the study suggested that discounted fertilizers be made available throughout the year to accommodate both major and minor seasons.

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