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Spotlight on Agricultural Finance: An Interview with an Agriculture Finance Officer

By Emily Riemer

Through a grant from the Bill & Melinda Gates Foundation and the MasterCard Foundation, Opportunity is now offering greater financial tools to people in rural areas, including 90,000 smallholder farmers in the next three to four years. Opportunity has already launched a successful agricultural finance program in Malawi, paving the way for similar programs in Ghana and Mozambique, with Rwanda and Uganda to follow shortly thereafter.

Opportunity‘s ag finance programs are growing so fast that our OptINnow partnership relationship manager Andrew Koehler is about to embark on a transfer to Accra as an agriculture finance officer, helping to build the program for Opportunity Ghana. I recently sat down with Andrew to find out about the program he’ll help to grow, and to learn why now is the time for ag finance in Ghana:

Why does Opportunity Ghana need microfinance right now?

The majority of their current loan portfolio is urban and periurban clients, but Ghana is also among the top 10 producers of cocoa in the world. So we want to provide those farmers with the financial tools to be economically sustainable.

Why do farmers need microfinance tools?

Microfinance products, like savings accounts, insurance products, and loans, help ensure food security. Loans help farmers pay expenses during the growing season. Without this access to capital, farmers resort to other ways of paying their bills. Some may side-sell their harvest to raise immediate funds, usually earning them only 40% of the crops’ value, or they turn to local loan sharks for credit with exorbitantly high interest rates, harming their financial situation in the long term. Savings accounts ensure the security of farmers’ cash, so that the money they have is protected.

Critics of ag finance sometimes argue that loaning to farmers living in poverty is risky. What is Opportunity doing to mitigate these risks?

Microfinance tools provide a safety net to farmers living in poverty, helping them make ends meet until they can earn income from their harvest. Local loan officers regularly meet with clients, completing questionnaires with them about their family profile and crops to be sure that Opportunity Ghana is offering them the correct size and type of loan. Opportunity hires local mappers and agricultural profilers to utilize GPS mapping techniques to determine the exact size of clients’ land holdings. The more information we have about clients, the more appropriate, effective financial tools we can offer them.

How many farmers will Opportunity Ghana be able to reach with microfinance?

The pilot program includes a little more than 500 farmers. By the end of 2011, our target is to have between 3,500-5,000 agricultural clients taking advantage of loans and savings products.

I’m certain that Opportunity’s ag finance program in Ghana will be as successful as the one in Malawi. Will you check back in often in the coming months and let us know your progress?

Certainly, I will! I’m confident that Ghana’s program is going to be a huge success. I will definitely report back with all the news.

Opportunity International was recently featured in a Financial Times online article about microfinance, microinsurance and food security, which highlighted our agricultural finance program in Malawi. Read more here.

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