afrol News, 15 November - A US$ 22.9 million project in Ghana - The ‘Rural Financial Services Project’ - is to receive a US$ 11 million loan from the International Fund for Agricultural Development (IFAD). A loan agreement was signed today at the Fund’s Headquarters by Mr. Edmund Deh, Acting Ambassador of the Republic of Ghana to Italy and Mr. Lennart Båge, President of the Fund.
- Rural development is a declared priority in the national development plan of Ghana, IFAD today stressed in a press release. As 80% of the population live in rural areas, accounting for more than 70% of national poverty, the worst problems of deprivation are found amongst rural people, especially women "who are particularly underprivileged".
- With substantial ongoing investments in infrastructure and services, the lack of a strong rural financial sector is the critical 'missing link' of an integrated rural development strategy, and its lack continues to stifle private sector initiatives in the rural economy, IFAD notes.
While the domestic commercial banks have steadily withdrawn from lending to the rural sector, the existing 110 small, community-owned rural banks and other small informal microfinance institutions are noted as "potentially important resources" for providing part of this 'missing link'.
According to IFAD, the project will seek to "promote growth and reduce poverty by deepening and broadening financial intermediation in rural areas." In line with the government’s policy, the project will support informal financial sector institutions operating in resource-deficit communities and districts.
The interventions are to be "targeted at the disadvantaged segments of the rural population, who are mainly women, and will include establishing a network of rural banks, restructuring and strengthening existing rural banks, and investing in activities to link informal financial entities to the formal sector effectively," IFAD states.
Because women in rural Ghana are more active in the formation and operation of informal financial groups, support to them will be significant and broad-based. Women constitute over half the rural population, head more than 40% of rural households and produce about 70% of all food.
The project will benefit an estimated 3.7 million rural people, mainly smallholders, near-landless farmers, women in general, as well as woman-headed households. Targeted clientele also include micro, small and medium entrepreneurs who have little or no access to mainstream financial services.
With this programme, IFAD has financed a total of 10 projects in the Republic of Ghana, for a total loan and grant amount of approximately USD 113 million.
Sources: Based on IFAD