USAID reserves $500,000 grant for Ghana agriculture

The USAID-Financing Ghanaian Agriculture Project (USAID-FinGAP) says it has reserved an amount of $500,000 as grant to the Eximguaranty Company Ghana Limited (Exim Ghana).

The grant it says, would be used to subsidize the cost of credit guarantee premiums on loans from financial institutions to agribusinesses in the rice, maize and soy value chains.

“The fund will serve as collateral substitute to help agribusinesses secure financing while reducing the risk for the financial institutions,” it said in a press release issued in Accra and copied to ghanabusinessnews.com February 24, 2015.

According to the release, to access this grant, a financial institution making a loan to an agribusiness in the rice, maize and soy value chain, will submit the loan application to Eximguaranty for consideration. Once Eximguaranty agrees to cover the transaction, the financial institution will either bear the 50% cost of the premium or share with the agribusiness.

The agreement signed by the two institutions has reduced the credit guarantee premium from 5.5% to 4.5% for agribusinesses in the project’s value chains. Eximguaranty guarantees up to 75% on the loan amount approved by the financial institution. USAID-FinGAP’s grant will be used to pay half of the credit guarantee premium required by the financial institutions, the release noted.

By Emmanuel K. Dogbevi