Farmers have been urged to leverage the Warehouse Receipt System (WRS) project to enable them use their stored produce as collateral in acquiring loans at better rates to support their businesses.
Senior Credit Infrastructure Specialist at the International Financial Cooperation (IFC), Ubong Awah – who was speaking at the Ghana WRS project consultation workshop in Accra, contended that the project is the most sustainable mechanism for agri-financing as it ensures security, confidence and reduces the risk of lending to the banks.
Explaining how the WRS works to the Business and Financial Times (BFT) on the workshop’s sidelines, he noted that: “After harvesting, the farmer deposits produce in a certified warehouse and is issued with a receipt with which he/she can apply for short-term credit from any financial institution”.
He however indicated that for the WRS to function effectively, it will require an enabling legal and regulatory framework that provides certainty and enforcement mechanisms, and support from stakeholders in the agriculture industry.
For this reason, he noted that the stakeholder engagement aims to discuss the provisions in a new national WRS draft bill – ensure a comprehensive legal and regulatory framework that establishes strong and satisfactory grounds for regulation and enforcement for all stakeholders.
The bill, when passed into law, is expected to streamline the process of issuing warehouse receipts – which will serve as official documents of title regulated by the Securities Exchange Commission, increase access to financing for farmers and improve pricing for their produce.
He cited land-related issues, insecurity, lack of access to market and low productivity as some factors impacting negatively on farmers; but said there is an opportunity for them to leverage the WRS project as an alternative means of acquiring loans and grants from financial institutions to maximise production and solve issues related to marketing their produce.
The WRS project is being implemented by the IFC, funded by Switzerland’s State Secretariat for Economic Affairs (SECO) in collaboration with Ghana government partners (Ministry of Finance and Ministry of Trade, Ghana Commodity Exchange and Ghana Standards Authority).
Meanwhile, Ms. Magdalena Wust, Deputy Head of Cooperation, Embassy of Switzerland in Ghana, has stated that the WRS bill is a key element for agricultural financing which stands at the intersection of innovation, efficiency and economic empowerment.
She added that the Swiss government through SECO has been a committed partner in Ghana’s economic development for many years, with the sole objective of promoting attractive framework conditions for sustainable growth and creating decent income opportunities for its population.
She further mentioned the development of sustainable value chains including agricultural commodities, SMEs’ competitiveness and farmers’ access to capital as some of the Swiss government’s priorities.
“Our partnership with the IFC aims at supporting agricultural value chain actors by increasing their access to finance and empowering them to strengthen their market power,” she also said.
While admitting that fluctuations, access to finance coupled with high interest rates remain major factors constraining farmers’ ability to invest in agriculture, she noted that the sector in Ghana has over time shown a positive growth rate.
The WRS project’s primary objective is to enhance access to market opportunities for smallholder farmers. By implementing it, farmers will be able to obtain warehouse receipts for their agricultural produce, which can then be used as collateral to access financial services such as loans. This will enable them to have better access to credit and financial resources, ultimately leading to improved productivity and income.