In Africa, despite promises to support agriculture, the sector still struggles to access credit due to various factors. With lenders focusing on more profitable areas and interest rate controls being ineffective, farmers face high borrowing costs. Commercial banks often divert agricultural credit funds to other sectors, limiting support for farmers. The share of agricultural credit in African economies has remained below 20% since 2015, contributing to the sector’s challenges. In countries like Ghana and Kenya, banks face difficulties in accurately categorizing agricultural loans, leading to underfunding. Despite efforts to improve access to credit, challenges persist, such as poor documentation by farmers. However, there are some positive developments, like Uganda’s growing uptake of agricultural insurance, which has increased the value of agricultural loans. Overall, more needs to be done to support farmers and ensure they have access to the credit needed for successful agricultural practices.
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African agriculture trapped in false hope of affordable credit.
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