Bawku East Small Scale Farmers Association (BESSFA) Rural Bank Limited

Introduction


The Royal Bank (TRB)/OVCF medium term loan is to enable BESSFA provide financing for farmers and other value chain operators under the Northern Rural Growth Programme (NRGP). The NRGP is a USD 106 million project funded by the International Fund for Agricultural Development (IFAD), African Development Bank (AfDB) and GoG. NRGP is a six year programme which will close in 2016. It is being implemented in the three (3) Northern Regions and five (5) adjoining districts in the Brong-Ahafo Region.
BESSFA will on-lend to the following:


i. 201 farmer groups comprising 1093 males and 1481 females giving a total of 2574 farmers to cultivate 1080 ha of maize, 520 ha of soybean and 166 ha of sorghum in the Upper East region;
ii. Savanna Farmers Marketing Company Ltd (SFMC) as the Off taker (Aggregator & Marketer);
iii. selected input dealers; and
iv. selected providers of bullock plough services.

Purpose


The facilities will be utilized as follows:
i. To purchase agro-inputs to increase productivity and output;
ii. Working capital to purchase produce from farmers, which (SFMC) in turn will sell produce as raw materials to Ghana Nuts, Golden Web, Akate Farms and others;
iii. Working capital to provide agro-inputs to farmers; and
iv. Working capital to purchase bullocks, ploughs and other accessories to provide services to farmers.

Tenor/Loan Repayment

The loan facility shall be for a period of five (5) years (60 months), available to farmers upon bullet repayment of the principal and interest at the end of each farming season for 5 cycles (5 years) with 9 months grace period for each cycle.

Pricing

The interest on the loan from the Fund to TRB for BESSFA shall be charged at Bank of Ghana (BoG) Policy Rate of 19% less 4.5% concession, i.e. 14.5% per annum.
The interest on the Loan from the TRB shall be charged at the rate of 20.5% per annum to BESSFA Rural Bank. This means that TRB shall charge a margin of 6% per annum on the loan to BESSFA Rural Bank.

The interest rates 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 Garu, Bawku, Pusiga, Dinduri and Nakpanduri in the Upper East 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 TO level;
• Marketing opportunities exist for Value Chain products for customers, such as Ghana Nuts, Golden Web, Alfa and Omega Ventures, Yedent Co., and Akate Farms;
• BESSFA Rural Bank employs 68 people full-time and 2574 plus other value chain operators are involved in the project.

Some Photos

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Some sections of the Outgrowers being engaged by the FMT in Garu-Timpane
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The FO supporting the farmers

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The FMT engaging the TO, who buys from the outgrowers, at a processing facility

 
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