The main focus of Agricultural Development bank (ADB) since its inception in 1965 has been the provision of credit facilities for the development and modernization of agriculture and allied industries. It is estimated that ADB is currently responsible for about 85% of institutional credit to agricultural sector.
The Agribusiness Division is made up of two departments namely the Agricultural Value Chain and the Agricultural Services Department.
The Agricultural Value Chain Department focuses on deepening financing to the primary production sector, focusing on developing viable value chains and the Agricultural Services Department provides financial inter-mediation to the agro-marketing, agro-processing and agricultural support sub-sectors such as inputs distribution as well as agricultural – related infrastructure.
Classification Of Agricultural Facilities
Agricultural facilities are classified based on the following:
- Size of loan
- Status of the borrower eg. Group loans, individuals, Limited Liability Company
- Type of project or scheme
- Purpose of loan
- Source of funding
Tenor of Facilities
The tenor of agricultural loans granted by ADB depends on the project type and thereby on such features as the cash flow, capital outlay and project maturity.
Based on the expected life of the project or activity the credit may be classified into three as follows
- Short-term loan: Typically granted as working capital to meet production ,transportation and marketing of agricultural produce. The period for short term loans is up to 18 months
- Medium-term loan: Granted for such purposes as the purchase of farm equipment, raising of livestock and processing equipment. The period for medium term loans is between 18 to 36 months.
- Long-term loan: Made for new and existing projects which require heavy capital outlay and / or long gestation periods, such as the establishment of plantations or cattle ranches etc. The period for long term loans is typically between 36 months and 84 months.
Requirement for Loan
Requirements for credit vary from one category of borrowers to another. However the following requirements apply to all categories
- Submission of business proposal
- Opening of account with the Bank
- Details of account operation with other financial institutions.
- Evidence of managerial capability to handle project.
- Evidence that project is not environmentally harmful
- Evidence that project can generate adequate cash flows to support repayment of facility.
- Provision of security acceptable to the Bank
Forms of credit disbursement
- Non-cash disbursement: The bank may disburse in kind or by making payment on behalf of the beneficiary customer according to the invoices submitted
- Cash disbursement: Credit is given outright to the beneficiary to finance the approved activity.
Loan-making procedure and approval
Applicants are advised to observe the three steps involved in the processing of loan requests.
- All applications for financial assistance should be directed to the Branch where the applicant’s account is held or a branch near the project site. On receipt of a request for loan, a relationship manager or credit officer will contact the applicant for further discussions.
- The credit officer or relationship manager will verify the information furnished by the applicant. In all cases the project site may be visited to assemble the necessary data required to analyse the project.
- After the project has been analyzed and found viable, the credit officer or relationship manager finally prepares a credit report and submits it to the appropriate approval authority
In all cases, the applicant will be required o provide security and/or collateral for the loan. These may take several forms, depending on the terms and conditions, nature and size of the facility granted.
- Cash collateral in blocked account
- Group executive guarantee
- Personal guarantee
- Stocks, bonds and bills
- Life policies
- Landed properties
Execution of Documents
To give legal backing to the agreement reached with the prospective customer, the following documents, among others, are duly executed between the Bank and the applicant.
- Heads of Agreement
- Contract of Indemnity
- Promissory Notes
- Mortgage deeds and other legal documents assessed on the basis of the total amounts involved.
Who should approach ADB for assistance?
Any individual, group or limited liability company with a viable project should contact ADB for assistance
When to approach the bank?
- Since most agricultural projects are time bound we advise that customers seeking financing should approach the Bank early.
- Customers can also approach the Bank during the project conception stage for advice.
Accra Financial Centre
P.O.Box 4191, Accra, Ghana
Tel: 0302 210210
Fax: 0302 686662