Assessing the Impact of Exchange Rate Volatility on Agric-Sector Lending: A Case Study of Agricultural Development Bank

Abstract

The agricultural sector is considered as one of the most important sectors of the Ghanaian economy since it constitutes a significant portion of our Gross Domestic Product. However, farmers experience challenges in accessing credit from banks. Over the years, the Ghana cedi has experienced some volatility on the back of the existing structure of the economy. This study seeks to assess the impact of exchange rate volatility on agric-sector lending using the Agricultural Development Bank (ADB) as the case. The research found that farmers finance their farming activities with money borrowed from family and friends. It also found that exchange rate volatility negatively affects agric-sector lending which in turn affects agricultural export volumes. The study recommends that farmers must come together to form societies which stand a better chance of accessing credit. The study also recommends that Financial Institutions organize financial literacy programs to educate farmers on the requirements they must meet in order to access credit. In addition, the study recommends that the Bank of Ghana collaborates with the Ghana Association of Bankers to develop a comprehensive policy to help farmers to access credit.