By Kofi Ahovi
The passage of the proposed National Agricultural Fund (NAF) in Ghana is been stalled due to the interest of the government to transform the Export Development Investment Fund (EDIF) to support agriculture, Business Week has gathered.
The government plans to expand the operations of EDIF to facilitate development in the agricultural sector. The fund was instituted to purposely support farmers that export their produce therefore farmers who do not intend to export their produce do not benefit from the fund. An approval has already been granted by the Office of the President to this effect, pending cabinet and parliamentary endorsement.
Part of the expected amendment will therefore seek to change the name of the fund to the Export Development and Agricultural Investment Fund (EDAIF) to reflect the additional focus. The amendments being proposed to the bill among others include the introduction of 0.5% levy to be imposed on non-oil imports for the purposes of supporting investment into agricultural activities.
In the EDIF Act, 20% of revenues are for investment into Export Development Activities and the committee that considered projects for disbursements under that area of activity is referred to as the grant committee. In the amendments another 20% is being considered to be used for Agricultural Development Activity.
The draft bill for the proposed NAF was completed by a consultant on behalf of the Private Enterprise Foundation (PEF), an umbrella body of private business in Ghana.
The establishment of the fund is to support all aspect of agriculture, which is the largest contributor to the country’s Gross Domestic Product (GDP).
The fund would be managed by Ghana National Agricultural Fund Corporation, which would be set up after the law is passed. The corporation would 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 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 bank 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 would also provide resources for agricultural support services such as extension, research, marketing, law enforcement in the country’s territorial waters etc. The fund will also help to achieve the goal of food security in Ghana.
The model of fund includes supporting on-farm diversification projects and value-added agricultural operations beyond the farm gate. In effect, the fund would support the whole agricultural value chain.
Also, credit provision would be accompanied with appropriate training that will enable farmers 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 also expected that certain percentage of existing taxes such as Value Added Tax (VAT), Import duties, communication service tax etc would be channeled to the fund.
It has also been proposed that a national agricultural levy 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 farming, fishing, livestock and needed ancillary services and infrastructure has been a drag on productivity growth and incomes in the sector.
The passage of the proposed National Agricultural Fund (NAF) in Ghana is been stalled due to the interest of the government to transform the Export Development Investment Fund (EDIF) to support agriculture, Business Week has gathered.
The government plans to expand the operations of EDIF to facilitate development in the agricultural sector. The fund was instituted to purposely support farmers that export their produce therefore farmers who do not intend to export their produce do not benefit from the fund. An approval has already been granted by the Office of the President to this effect, pending cabinet and parliamentary endorsement.
Part of the expected amendment will therefore seek to change the name of the fund to the Export Development and Agricultural Investment Fund (EDAIF) to reflect the additional focus. The amendments being proposed to the bill among others include the introduction of 0.5% levy to be imposed on non-oil imports for the purposes of supporting investment into agricultural activities.
In the EDIF Act, 20% of revenues are for investment into Export Development Activities and the committee that considered projects for disbursements under that area of activity is referred to as the grant committee. In the amendments another 20% is being considered to be used for Agricultural Development Activity.
The draft bill for the proposed NAF was completed by a consultant on behalf of the Private Enterprise Foundation (PEF), an umbrella body of private business in Ghana.
The establishment of the fund is to support all aspect of agriculture, which is the largest contributor to the country’s Gross Domestic Product (GDP).
The fund would be managed by Ghana National Agricultural Fund Corporation, which would be set up after the law is passed. The corporation would 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 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 bank 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 would also provide resources for agricultural support services such as extension, research, marketing, law enforcement in the country’s territorial waters etc. The fund will also help to achieve the goal of food security in Ghana.
The model of fund includes supporting on-farm diversification projects and value-added agricultural operations beyond the farm gate. In effect, the fund would support the whole agricultural value chain.
Also, credit provision would be accompanied with appropriate training that will enable farmers 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 also expected that certain percentage of existing taxes such as Value Added Tax (VAT), Import duties, communication service tax etc would be channeled to the fund.
It has also been proposed that a national agricultural levy 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 farming, fishing, livestock and needed ancillary services and infrastructure has been a drag on productivity growth and incomes in the sector.
Comments