Mr. Martin Eson-Benjamin, CEO of the Millennium Development Authority (MiDA), a government agency of Ghana that implements development contracts funded by the US Millennium Challenge Corporation (MCC), noted that improved micro-credit may emerge as a powerful tool to achieve national food security by providing financial and technical assistance needed by small scale farmers. The remarks came at the 4th annual microfinance conference organized by the faculty of Social Sciences of the University of Cape Coast (UCC), which addressed “Microfinance and Food Security in Africa.” The two-day event was also attended by delegates from other African nations.
According to a news report from Ghanaweb.com, Mr. Eson-Benjamin contended that since small scale farmers would continue to dominate Ghana’s agricultural sector, systematic programs to offer financial and technical assistance to those using suboptimal practices could potentially increase farm production and alleviate food shortages. He stressed that there is a, “linkage of success in agricultural transformation to credits for on-farm and agricultural value chain investment,” available through the Agricultural Credit Program. The program was put in place under the Millennium Challenge Coporation’s assistance package to Ghana, a five-year, 547 million USD compact between the two nations signed in 2006.
The largest component of the compact, a 241 million USD project, is designed to enhance the profitability of commercial agriculture amongst small farmers, a key segment of the nation’s economic base. Notably, agriculture accounts for approximately 40 percent of the Ghana’s gross domestic product, directly employs approximately 60 to 70 percent of the labor force, and generates more than 55 percent of its foreign exchange earnings. The program focuses on increasing the production of high-value cash and staple consumer crops in certain areas of Ghana, as well as enhancing the general competitiveness of Ghana’s horticultural export base. The program will operate in 23 districts in the Northern, Central Afram Basin, and Southeastern regions, where poverty rates generally hover above 40 percent. Further, the compact includes an initiative designed to reduce transportation costs affecting agricultural commerce, alongside plans to expand the availability of basic community services and strengthen rural bodies that provide services complementary to agri-business.
To date, 300 farmer organizations have started skill based training related to commercial agriculture via the project. Meanwhile, local financial institutions are receiving guidance as to how to better appraise requests for agricultural credit as well as on offering sound yet accessible financial products. However, according to a progress report released by the Millennium Challenge Corporation at the end of 2008, such training in commercial agriculture reached just 600 farmers. Meanwhile, approximately 3.5 million USD has been disbursed from the Bank of Ghana to 35 local Participating Financial Institutions, which in turn lend funds forward to credit providers such as commercial banks, savings and loans, and rural banks, in theory stimulating productive investment.
The Millennium Challenge Account (MCA) is a bilateral development fund announced by the Bush administration in 2002, and formally created in 2004. Funds are appropriated by Congress every year and managed by the Millennium Challenge Corporation (MCC), which, in contrast to other federal entities such as USAID, is oriented explicitly to support development initiatives in the world’s poorest nations. MCC selects eligible countries for Compact Assistance based on their performance across a series of good governance indicators. By the end of October, 2008, the MCC has approved compacts totaling approximately $6.3 billion USD with 18 partner countries: Madagascar, Cape Verde, Honduras, Nicaragua, Georgia, Armenia, Vanuatu, Benin, Ghana, Mali, El Salvador, Mozambique, Lesotho, Morocco, Mongolia, Tanzania, Burkina Faso and Namibia.
By Yanni Hao, Research Assistant
Additional Resources:
Bush administration: “Home”
US Congress: “Home”
Ghanaweb.com: “Home” “Improved Micro-Credit Support to Farmers Could Ensure Food Security”
Ghana 4th Annual Microfinance Conference: “Home”
The Millennium Development Authority: “Home” “Overview of the MCA Ghana Program”
The Millennium Challenge Corporation: “Home” “Ghana Agriculture Project” “Ghana Project Progress Report” “Compact Assistance”
The Millennium Challenge Account: “Home”
University of Cape Coast: “Home”
United States Agency for International Development (USAID): “Home“
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