Tenor/Loan Repayment

The tenor and repayment terms of the AgDB/OVCF Term Loan are as follows:

For PVL


i. The term loan for Refinancing AgDB’s existing exposure to PVL (equipment procurement) shall be repaid by semi-annual installments of the principal loan amount, adapted to the production cycle of the value chain over a period of Ten (10) years, including two (2) years moratorium on the principal repayments only, commencing from the date of first disbursement.


ii. The term loan for rice production shall be retired by semi-annual installments of the principal loan amount, adapted to the production cycle of rice over a period of 6 years, including 9 months moratorium on principal only, commencing from the date of first disbursement.


For MuFA and AICMS


MuFA and AICMS shall retire their respective loans over 5 years with 6 months moratorium on both principal and interest, adapted to the production cycle of rice. The principals repaid shall be recycled for the 2nd crop each year for 4 years until they are fully retired at the end of the 5th year. This is effective from the date of first disbursement.

Pricing

The interest on the loan from the bank shall be charged at the rate of 21.5% per annum for both PVL and the Outgrowers. This rate would be reviewed annually at the beginning of the year, based on the prevailing economic conditions including the Policy Rate of Bank of Ghana.

Justification

  • The project is located in rural areas in the Tongu district in the Volta Region. The inhabitants are mainly farmers and generally disadvantaged. Therefore, the project is meant to reduce poverty through increase in outgrowers’ incomes;
  • The projections in the project were based on bankable and commercially viable business plan at the Technical Operator’s  level;
  • Marketing opportunities exist for rice products both domestically and regionally;
  • The project employs 79 people full-time and can employ over 2000 people when fully implemented.  Many of them will be self-employed, services and support providers and farmers, besides the farm labourers.

The project will on the average save about USD 8.99 million in foreign exchange for the importation of about 6398 tonnes of rice produced by the scheme per annum.

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Figure 1: Rice farm at Aveyime

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Figure 2: OVCF engaging some of the AICMS farmers at PVL.

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