The Ghana Commodity Exchange (GCX) in collaboration of ARB Apex Bank has launched the Electronic Warehouse Receipt (EWR) financing programme.
ARB Apex Bank has set aside over GH¢ 50 million to commence the programme to provide credit and loans to farmers, based on their GCX EWR, and the IFC of the World Bank Group through the Swiss State Secretariat for Economic Affairs (SECO) has also pledged to support the programme.
Speaking at the launch, the Chief Executive Officer of GCX, Dr Kadri Alfah said the new financing programme would save farmers from their personal property for collateral before they could secure loans to finance their farming business.
"Farmers don't need to pledge houses and cars for use as collateral; their commodities deposited into a GCX certified warehouse are enough. This is being done to achieve the goal of true development of the agricultural value chain and improve the lives of rural communities," he said.
Dr Alfah said ARB Apex Bank was the first partner bank of GCX to have issued loans to farmers using their commodities stored at a GCX certified warehouse as collateral.
"This will give Ghanaian farmers the working capital they need to sustain their business activities in between each harvesting season as well as give them greater purchasing power for seeds, fertilizers and other inputs," Dr Alfah said.
He said it was estimated that 200,000 farmers would initially benefit from this novel product in the first year of its operation and significantly increase as the programme takes root.
The CEO of ARB Apex Bank, Mr Kojo Mattah said "Even though the RCBs have been lending to the agricultural sector, this collaboration provides an opportunity for the RCBs to upscale and lend to more farmers since the risk in this system is nearly eliminated."
He said the operations of the Ghana Commodity Exchange solved numerous problems that had confronted Ghanaian farmers and their markets for years and mentioned some the problems as post-harvest losses, sale of unstandardised commodities, delayed payment for commodities sold and inability to access credit due to collaterals demanded from banks.
The Project lead for Ghana WRS, Mrs Doreen Oppan said "The IFC Ghana WRS Project- a technical assistance project- would continue to jointly facilitate technical support, capacity development and education activities for the rural and community banks and their network of farmers."
The Director of the Ashanti Regional Coordinating Council, Mr Ebenezer Ntow Ayisi said "The innovations on offer from the Ghana Commodity Exchange can indeed only be described as providing a totally different future for agriculture in Ghana... .A future where farmers and buyers have the opportunity to apply grading standards to their produce, obtain suitable prices for their wares and now a future where farmers can go into banks to obtain loans."
The GCX was established to facilitate high quality, certified commodities, provide secured storage and structured trading services, and provide smallholder farmers with the opportunity to benefit from the warehouse receipt financing scheme.