Banking & Finance

USAID/MFA, RDF promote financial inclusion among agribusinesses in northern Ghana


For over 20 years, Nasibatu Awal cultivated one acre each of maize and groundnut—the yield was barely enough to feed her family.

The smallholder farmer and member of the Suglo Nbori Buni Group, a farmer group, in Shishegu-Tamale, capital of Ghana’s Northern Region, yearned to increase productivity.

But access to input credit in the form of improved seeds, fertilizer and tractor plowing services, or bank loans that would allow her to acquire these, were beyond her reach.

Like many small agricultural value chain actors living in hard-to-reach communities in northern Ghana, Awal could not access formal banking services. High interest rates charged by microfinance institutions and unfavorable repayment terms also discouraged her from applying for a loan.

Instead, the 51-year-old mother of five relied on limited funds through her local village savings and loan association (VSLA) to buy seed and fertilizer and pay for plowing services. Still, Awal had to use her hard- earned savings to acquire enough inputs to cultivate more land, increase productivity, and sell extra produce for income to feed her family.

In the 2022 production season, this all changed when Awal received a $50 loan from the Rural Development Fund’s (RDF’s) VSLA Loan Scheme to access ploughing services and to buy enough seeds and fertilizer to cultivate an additional acre of groundnut. The 30 members of the VSLA save small amounts of money and use the accumulated savings to secure loans.

“The 25% interest on the RDF loan compared to the 35% charged by banks at the time came in handy,” Awal said. “Monthly installment payments, which could be restructured upon request, also encouraged me to take it. Next farming season, I plan to take an even bigger loan to cultivate six acres of maize and groundnut compared to the original two I used to farm.”

Implemented under a strategic partnership between the USAID-supported Feed the Future Ghana Mobilizing Finance in Agriculture (MFA) Activity and RDF Ghana (a development finance institution established by the Ghanaian and Danish governments), the RDF VSLA loan scheme unlocks financing for bottom-of-the- pyramid value chain actors in northern Ghana like Awal, who require only small amounts to boost production and aggregation of maize, soy, groundnut, and shea.

Using the VSLA model, the MFA-RDF strategic partnership promotes financial inclusion of small value chain actors largely underserved by the formal financial system by providing access to affordable credit through the formal banking sector. The partnership also provides VSLA members with training on financial literacy and good agronomic practices.

Financing disbursed during the first phase of the RDF VSLA loan scheme in 2022 was timely for Awal and other members of 14 VSLA groups in the Northern and North East Regions of Ghana. It enabled farmers to plan their activities for the season, buy seed and fertilizer, and pay for plowing services. Those engaged in aggregation were also able to access working capital to mobilize produce from smallholder farmers in their communities for sale to bigger buyers. Expanding the RDF VSLA loan to more beneficiaries is exactly what the MFA-RDF strategic partnership seeks to achieve.

“The RDF-VSLA loan has restored beneficiaries’ hope and enabled them to sustain and expand their farming and crop aggregation activities. I appeal to RDF and MFA to expand it further to benefit more needy VSLA members who are unable to access financial support from the formal financial sector,” Fati Seidu Tambro, Executive Director of Sung Foundation Ghana and a facilitating agent for the RDF VSLA Loan Scheme.

According to RDF Investment Officer Emelia Appiah, “The first phase of the RDF VSLA loan facility has been a success in terms of utilization and commitment to repayment. RDF is very happy with the level of impact we are achieving. I’m very optimistic that VSLA groups will complete repayment, and access more loans for the next production season. Going forward, RDF will explore innovative ways to address beneficiaries’ access to farm mechanization and processing equipment.”

 Nasibatu Awal stands by bags of groundnut harvested from her farm.   

Increased financing for small agricultural value chain actors facilitated by USAID-supported Mobilizing Finance in Agriculture provides opportunities for smallholder farmers in the country’s north.

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