Parliament approves $52m IFAD loan for rural development

Parliament has approved a $52 million loan agreement between the Ghanaian government and the International Fund for Agricultural Development (IFAD).

The loan will finance the Promoting Rural Opportunities, Sustainable Profits, and Environmental Resilience (PROSPER) project.

The loan is a blended combination of $35 million as a regular loan and $17 million as a concessional loan.

The primary objective of the project is to strengthen the integration, climate resilience, and environmental sustainability of smallholder farmers and businesses operating within the priority value chains in the Northern and Middle Ecological belts.

The project aims to leverage the increased demand generated by the national agro-processing strategy, which seeks to enhance the agricultural sector’s value addition and increase its contribution to the national economy.

Vice Chairman of the Finance Committee, Patrick Boamah, presented an outline of the terms and conditions of the loan agreement. The loan has a repayment period of 20 years, allowing sufficient time for the government to repay the borrowed amount.

Additionally, the loan comes with a grace period of five years, providing an initial period during which no repayment is required.

The loan agreement specifies a service charge of 1.48 percent per annum, which represents the fee paid to IFAD for administering the loan. Furthermore, an annual interest rate of 1.36 percent will be applied to the outstanding balance of the loan.

The project is expected to have a significant impact on the agricultural sector in the designated regions, boosting the resilience and profitability of smallholder farmers and businesses while promoting sustainable practices and environmental conservation.