We provide liquidity to banks to enhance access to finance for the Agriculture and Renewable Energy sectors.
The illustration below shows how lines of credit are disbursed to finance Agriculture and Renewable Energy sectors.
RDF Ghana LBG offers lines of credit to Financial Institutions (FIs).
FIs receive funds.
FIs lend funds to MSMES in Agriculture, Agribusiness and Renewable Energy.
We derisk loans to the Agriculture and Renewable Energy sectors by absorbing up to 50% of the losses on a portfolio of loans advanced by Partner Financial Institutions (PFIs) to the sector.
Guarantees are used as security enhancement and interest reduction mechanisms for borrowers. When banks require lenders to secure loans, and acceptable security is difficult to come by, guarantees are a way to overcome this difficulty. Moreover, guarantees mitigate the risk profiles of borrowers and this reduces the risk premium PFIs places on borrowers.
We support PFIs and our loan beneficiaries with the skills and technologies needed to make profitable use of our lines of credit and credit guarantees.
The bulk of our technical assistance (TA) budget is focused on supporting the MSMEs we provide funding to via our PFIs. To ensure that TA is most beneficial to these MSMEs, we discuss their needs and understand their challenges on our monitoring visits to their farms and places of business.
Our PFIs, as part of the application process, undergo extensive financial and legal due diligence. The weaknesses and challenges teased out of this due diligence process become the basis of the TA for our PFIs.
RDF may decide to provide industry-wide or regional based technical assistance programme from a felt need as a result of interactions with the market including key players such as development partners and / or the regulator.