DBG announces game-changing recommendations to achieve food security
Development Bank Ghana (DBG) has announced the key outcomes of its recent multi-stakeholder value chain workshops held across a number of regions in the country, revealing extensive insights and also putting forward game-changing recommendations to support Ghana’s efforts to achieve food security among other economic benefits. This was made public by the Bank at the DBG Value Chain Dissemination Workshop held at the Bank’s office in Accra.
The key outcomes from the workshops with main players in the rice, soya, maize and poultry sectors were put out in a report where they were classified under five main areas. These are (1) mapping the value chain, (2) identifying SMEs for DBG and its partners’ pipeline, (3) undertaking policy and regulatory reforms, (4) financing and (5) implementation.
Under “Mapping the value chain”, the Bank established that there were in total, over 13 development partners operating in the four value chains although some operate in more than one sector. Through this, DBG has been able to identify the gaps that currently exist, within which the Bank can play a critical role.
In terms of “identifying SMEs for DBG and its partners’ pipeline”, 29 SMEs were selected for further assessment including being subjected to the rigorous due diligence necessary for qualification to receive financing from DBG via its commercial banking partners or participating finance partners (PFIs).
“Undertaking policy and regulatory reforms” covers the effort aimed at addressing identified challenges which cut across all the value chains. These include (1) low productivity, (2) high post-harvest losses emanating from issues with aggregation, transportation, storage and trading, (3) poor extension services, capacity building and technical assistance, (4) low levels of value addition especially processing within the value chains and (5) the lack of reliable value chain data for decision making.
In the area of “financing”, DBG’s assessment revealed the financing requirements of the four value chains and the need for stakeholders to coordinate their resources in order to meet the objectives. In line with this, total financing over five years was projected at US$1.04 billion, of which US$686 million has been identified, leaving a financing gap of US$354 million. As part of the financing, it is estimated that GCX will need a seed capital of about US$200 million to implement the proposed reforms. Although this funding is not readily available, DBG will work with GCX, the Shareholder and other interested stakeholders including equity funders to secure this funding which is critical for a successful implementation of the recommendations.
Under “implementation”, DBG established six main pillars under which it has placed the various actions necessary to deliver on the outcomes. The six pillars are (1) Production related recommendation, (2) Aggregation, warehousing, storage and trading, (3) Agro-processing, (4) Policy advocacy, (5) Capacity building and technical assistance and (6) Studies.
For the recommendations, DBG’s objective is to unplug the identified bottlenecks along the critical paths of the value-chains of the rice, maize, soya and poultry sectors. They include the establishment of an input credit system which is aimed at increasing production and productivity by providing high-yielding seeds and fertilizer. It also includes the incorporation of a subsidiary of the Ghana Commodity Exchange (GCX) which will tackle the issue of post-harvest losses, reduce the amount of food in storage and also increase storage life of commodities. Another recommendation calls for the use of technology to advance production, productivity and input pricing, market information through videos and audio recordings, aggregators buying at farm gate and taking them to the warehouses and continuous trading by GCX.
Speaking at the event, Dr. Kwabena Opuni-Frimpong, DBG’s Chief Economist and Head of the Economic Research Department said, “DBG’s overall goal is to seek consensus with its stakeholders and partners in ways in which these recommendations can effectively be implemented to the benefit of our commercial banking partners or participating financial institutions (PFIs) and Small and Medium Enterprises (SMEs) with the view of supporting national growth and transformation.”
In line with its operating model, DBG is employing a collaborative approach in order to ensure that the recommendations are implemented. Currently, there is an ongoing communication and collaboration with a dedicated team from the Ministry of Food and Agriculture (MoFA) on the next phase, which involves implementing the recommendations. This will be based on a Memorandum of Understanding (MoU) which will be signed by both parties. Already, out of the 29 SMEs identified from the value chain workshop, 13 have been taken into the pipeline by the PFIs. The GCX has also accepted the recommendations which relate to its operations and will be working with DBG to set out the terms of reference, workplan and timelines in order to secure implementation.
Food imports are responsible for about half of food inflation in Ghana. With the high import volumes of staple food items, particularly rice, sugar, and poultry, the effects of the cost of living on the average citizen cannot be underestimated. Food security is therefore an issue in the country and this is confirmed by Ghana’s 83rd ranking in 2022 out of 115 countries on the Global Food Security Index. It is in this context and consistent with DBG’s 5-year strategic plan, that the Bank and its key partners undertook deliberate efforts including the multi-stakeholder workshops to unravel the issues in order to be able to address market failures in critical food supply chains of maize, soya, poultry, and rice.
