By Kofi AHOVI
The National Agricultural Fund (NAF) Bill is expected to be presented to the Minister of Food and Agriculture this week, who will then present it to cabinet for scrutiny and approval.
After it is approved, it will be forwarded to parliament for passage or otherwise.
The establishment of the fund is to support all aspects of agriculture, which is the largest contributor to the country’s Gross Domestic Product (GDP).
The fund will be managed by the Ghana National Agricultural Fund Corporation, which will be set up after the law is passed. The corporation will have decentralized offices at both the regional and district levels.
The initiative to establish the fund became necessary due to the unwillingness of banks to lend money to farmers because of the high risk associated with farming, which has resulted in a huge gap between credit demand by farmers and supply.
Also, agricultural production is peculiar and seasonal, hence requires specialized financial services, which the banks do not offer.
The establishment of the fund is expected to make resources available to make agricultural production more capital intensive and more attractive to the youth.
The fund will also provide resources for agricultural support services, such as extension, research, marketing and law enforcement in the country’s territorial waters, among others.
The fund will also help to achieve the goal of food security in Ghana.
The model of the fund includes supporting on-farm diversification projects and value-added agricultural operations beyond the farm gate. In effect, the fund will support the whole agricultural value chain.
Also, credit provision will be accompanied with appropriate training that will enable farmers to effectively utilize the credit.
The model has subsidy component that will reduce the cost of the various inputs that are used by farmers for production.
The fund is expected to get its seed money from the government, while a certain percentage of funds will be channeled from the consolidated fund into the agric fund.
This is in agreement with the Maputo Declaration which calls on governments to channel at least 10% of national expenditure to the agricultural sector.
It is also expected that a certain percentage of existing taxes such as Value Added Tax (VAT), import duties, communication service tax, etc., will be channeled to the fund.
It has also been proposed that a national agricultural levy (NAF) should be imposed on selected goods, while a percentage of the expected oil revenue should be directed into the fund.
Although agriculture accounts for 35% of GDP and 60% of employment, only 6% of bank credit goes to the sector.
The lack of access to credit for key activities, such as farming, fishing, livestock and needed ancillary services and infrastructure, has been a drag on productivity growth and incomes in the sector.
The NAF was proposed by the Private Enterprise Foundation (PEF), an umbrella body of private businesses in Ghana.
The National Agricultural Fund (NAF) Bill is expected to be presented to the Minister of Food and Agriculture this week, who will then present it to cabinet for scrutiny and approval.
After it is approved, it will be forwarded to parliament for passage or otherwise.
The establishment of the fund is to support all aspects of agriculture, which is the largest contributor to the country’s Gross Domestic Product (GDP).
The fund will be managed by the Ghana National Agricultural Fund Corporation, which will be set up after the law is passed. The corporation will have decentralized offices at both the regional and district levels.
The initiative to establish the fund became necessary due to the unwillingness of banks to lend money to farmers because of the high risk associated with farming, which has resulted in a huge gap between credit demand by farmers and supply.
Also, agricultural production is peculiar and seasonal, hence requires specialized financial services, which the banks do not offer.
The establishment of the fund is expected to make resources available to make agricultural production more capital intensive and more attractive to the youth.
The fund will also provide resources for agricultural support services, such as extension, research, marketing and law enforcement in the country’s territorial waters, among others.
The fund will also help to achieve the goal of food security in Ghana.
The model of the fund includes supporting on-farm diversification projects and value-added agricultural operations beyond the farm gate. In effect, the fund will support the whole agricultural value chain.
Also, credit provision will be accompanied with appropriate training that will enable farmers to effectively utilize the credit.
The model has subsidy component that will reduce the cost of the various inputs that are used by farmers for production.
The fund is expected to get its seed money from the government, while a certain percentage of funds will be channeled from the consolidated fund into the agric fund.
This is in agreement with the Maputo Declaration which calls on governments to channel at least 10% of national expenditure to the agricultural sector.
It is also expected that a certain percentage of existing taxes such as Value Added Tax (VAT), import duties, communication service tax, etc., will be channeled to the fund.
It has also been proposed that a national agricultural levy (NAF) should be imposed on selected goods, while a percentage of the expected oil revenue should be directed into the fund.
Although agriculture accounts for 35% of GDP and 60% of employment, only 6% of bank credit goes to the sector.
The lack of access to credit for key activities, such as farming, fishing, livestock and needed ancillary services and infrastructure, has been a drag on productivity growth and incomes in the sector.
The NAF was proposed by the Private Enterprise Foundation (PEF), an umbrella body of private businesses in Ghana.
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