The Development Bank Ghana (DBG) is proposing a dedicated US$200 million funding to the Ghana Commodity Exchange (GCX) to help revamp Ghana’s agricultural sector.
This is to bridge the financial gap hindering the country’s food production and sufficiency. Over all, total financing to achieve this over a five-year period was projected at US$1.04 billion, of which US$686 million has been identified, leaving a financing gap of US$354 million.
DBG makes this strong case on a back of recommendations made after a recent nationwide multi-stakeholder value chain dissemination workshop to help Ghana reap the full economic benefits of food security particularly in the rice, maize, soya and poultry sectors.
“What we had from our estimate as well as speaking with GCX is that we may require about $200 million in seed capital if we really want this to go ahead. Remember that they have to buy stock from the farmers, they have to store and do a lot of other things too”, says Chief Economist and Head of the Economic Research Department of DBG, Dr. Kwabena Opuni-Frimpong.
According to him, DBG will collaborate with relevant stakeholders to secure funding to drive the needed reforms.
This he says will enable the Ghana Commodity Exchange to play its critical role in helping buyers and sellers in the agric sector.
“DBG cannot provide that amount of money, but I believe that DBG can work with other equitable funders in Ghana who may be willing to do that. Government may want to take a stake into it because I think this is a national security issue“.
Food imports constitute about half of the food inflation. With high implications of staple food items, particularly rice, sugar, and poultry, the effects of the cost of living on the average citizen must be considered.
Structural reforms of the economy, including food security issues, especially in areas where the country has a comparative advantage, are crucial in mitigating many economic challenges and addressing the current high cost of living.
On the policy and regulatory reforms, the recommendations centered on:
(i) aligning government input credit facility to continuous marginal increases in farm size.
(ii) standardizing seeds across the agro-ecological zones while taking account of its soil and tolerance for fertilizer.
(iii) investing in research and development in institutions such as Council for Scientific and Industrial Research (CSIR) in generating high yielding seeds for farmers.
(iv) reforming and expanding the role of Ghana Commodity Exchange (GCX) in the distribution of farm inputs and the aggregation, purchasing, storage, warehousing, and trading of cereals.
(iv) undertaking sample surveys within the value chains to improve data as a basis of sound decision making.