Ahead of the 2027 Budget presentation in Ghana's Parliament on November 12, an analysis of 25 years of data from the Bank of Ghana shows that the agriculture sector has consistently received a small share of formal commercial bank credit. Professor Fred M Dzanku's data indicates that agriculture's share of bank credit has ranged between 3% and 13%, averaging 5.7%. This is significantly lower than the sector's contribution to the country's GDP and employment.
In 2025, agriculture generated 22.8% of Ghana's GDP and employed a third of the workforce, yet it received only 4.3% of commercial bank loans. Even the state-owned Agricultural Development Bank (ADB) allocated less than 30% of its loan book to agriculture. Despite efforts to stabilize the macroeconomy and pay down state arrears, the situation has not improved significantly. Between March 2025 and October 2026, commercial banks pumped GH¢33 billion in fresh credit into the economy, but agriculture's slice of total credit actually shrank further to 3.1% by August 2026.
The analysis suggests that the low allocation of credit to agriculture is due to the high risk associated with lending to the sector. Unlike importers and service providers, agricultural loans have a longer cash cycle and are more vulnerable to factors such as weather and land title issues. For instance, when planting-season rainfall fell 25% below normal in 2025, entire harvests were wiped out. Additionally, 40% of feeder roads turn to mud during harvest, making it difficult for farmers to access markets.
To address the issue, the government plans to unveil the US$10 billion "New Economy" programme for 2027 to 2030, which includes commercial agriculture, oil palm, pharmaceuticals, and textiles as key sectors. The programme aims to trim the statutory primary fiscal surplus target under the Public Financial Management Act from 1.5% of GDP down to 0.5%. However, experts argue that this fiscal space must be spent effectively to support the sector.
To achieve this, four simple tests must be passed. Firstly, direct ministry lending should be stopped, and at least 70% of productive funds should be channeled through the Development Bank Ghana (DBG) and GIRSAL as first-loss guarantees and irrigation capex. This will ensure that every GH¢1 of public money crowds in at least GH¢3 of commercial bank credit. Secondly, the 60.9% default trap must be addressed at its root by tying agribusiness support strictly to irrigation, parametric weather insurance, and electronic warehouse receipts.
The third test involves powering the 24-Hour Economy before taxing it. A pharmaceutical or garment factory cannot run night shifts without proper infrastructure. Additionally, institutional food suppliers under Free SHS were still chasing GH¢250 million in unpaid bills as recently as October. Addressing these issues will be crucial to increasing credit allocation to the agriculture sector.
The 2027 Budget presentation will be a critical moment for Ghana's economic policy. The government's ability to effectively support the agriculture sector and implement the "New Economy" programme will be closely watched. If done correctly, it could lead to increased credit allocation to the sector and improved economic outcomes.
Key points
- Agriculture received only 3.1% of commercial bank credit in Ghana by August 2026.
- The sector's low credit allocation is due to high risk associated with lending to agriculture.
- The government plans to unveil a US$10 billion "New Economy" programme to support key sectors, including commercial agriculture.
