Millennium Challenge Account keen on transforming agribusiness in Ghana
By Masahudu Ankiilu Kunateh, Ghanadot

Accra, July 27, Ghanadot - The Millennium Development Authority (MiDA), is one and half years old of commencing actual work since its establishment as an organisation responsible for the implementation of programmes under the Millennium Challenge Account (MCA) compact signed between Ghana and the United States of America.

The five-year compact signed in August 2006, actually took off in February 2007 after MiDA was established and the compact is expected to complete in 2012. It aims at reducing poverty by raising farmers’ incomes through private sector led agribusiness development.

The Millennium Development Authority (MiDA) has so far spent a total of $15millon out of the $547million Millennium Challenge Account (MCA) in the 30 beneficiary districts of the Central, Eastern and Northern Regions in the country.
The $15million covered projects in the area of agriculture, transportation and rural services.
The Chief Executive Officer (CEO) of the Millennium Development Authority (MiDA), Mr. Martin Eso-Benjamin has announced recently.

Programmes

It is expected to inject approximately $547 million into the Ghanaian economy over the period, and will also benefit directly those living in areas of the country where poverty rates are generally above 40 per cent.

Programmes under the compact consists of three projects namely agriculture, transportation and rural services. They will focus on increasing the production and productivity of high value cash and food staple crops in certain areas of Ghana, and enhance the competitiveness of Ghana’s export base in horticultural and traditional crops. The programme is currently operating in 23 districts in the Northern, Central and Eastern regions.

Indeed, the programme took off with the initial disbursement of funds in tranches from the MCA to Ghana in March 2007. He said over the past year, MIDA has been busy putting together implementing documents and signing agreements with some Ministries, Departments and Agencies (MDAs) and some institutions adding that some contracts have already been awarded for work to begin.

He explained that the MiDA, unlike other government establishments, is a new development arrangement which helps to cut off bureaucracy associated with government work. "Whereas other agencies will design plans and present them to government for funding lacking the resources to do the work, MiDA already have the funds to implement its projects. It does not need to go through any approval from any quarter, thus cutting off bureaucracy and its attendant delay of projects".

Mr. Eson Benjamin disclosed that $52 million was earmarked for activities under the first year of the compact, targeted at agriculture. Agriculture, is the backbone of Ghana’s economy, accounting for approximately 40 per cent of the country’s Gross Domestic Product, directly employing 60 to 70 per cent of the labour force, and generating more than 55 per cent of foreign exchange earnings.



However he stressed that the selected districts which are the intervention areas of the projects being undertaken have high rates of poverty and in the Northern Region and parts of the Afram basin for instance, the incidence of poverty in rural population was as high as 90 per cent, with incomes well below $2 a day.

Because agriculture is multi-sectoral, he said it needs the support of other sectors, hence the three legs of the projects earmarked to address poverty through agriculture.

Under agricultural projects, the Chief Executive Officer noted that Farmer-Based Organisations (FBOs) were currently being trained in the 23 districts identified as intervention zones to accelerate the development of commercial skills and capacity, while their business partners, including entities that add value to agricultural crops such as processors and marketers, are all being trained.

He said the Ghana Irrigation Development Authority has been brought on board to provide an all year-round irrigation. The intention is to establish a limited number of retention ponds and wells requested by the FBOs and their partners for whom access to water is crucial to the success of their business.

Horticultural crops like lemon, he intimated, can be irrigated and exported all year round.

He explained that FBOs consist of individuals who own farms but operate in a particular area or domain, engaging in similar activities; for instance pineapple and cocoa farmers.

Among them are those who supply services, inputs and those who support agri-business.

Because they do not own the land on which they farm in most cases, he said there is a need to perfect their ownership of land, thus under the agricultural projects, MiDA hopes to improve the tenure security for existing land users and facilitate access to land for higher value agricultural crops in the intervention zones. Streamlining of ownership of land for the farmers will facilitate loan acquisition for expansion.

The issue of post harvest losses and handling is also another important area of intervention. Farmers need to deal with post harvest losses and due to the lack of good preservation practices and storage facilities, they are unable to produce beyond certain capacity.

The Authority is facilitating strategic investments by FBOs and their partners in post-harvest infrastructure improvements and building the capacity of the public sector to introduce and monitor compliance with international protection standards. For instance with the export of horticultural products like pineapples and water melons, there is a need for a pack house (shaded area on the farm to shelve the produce from direct sunlight during and just after harvesting).

For some businesses, there is a need for pre-coolers or cold houses which must be located on the farms to ensure that the products being exported would get to their destination under a certain standard temperature in order to extend their shelf life at their destination.

To ensure reduction of post harvest losses, Mr. Eson Benjamin stressed the need to provide the farmers communally, facilities such as pre-coolers, noting that farmers could come together, put their produce together in the pre-coolers, to store them.

The Authority is also facilitating the improvement of credit services for on-farm and value chain investments.

The assistance by MiDA is to augment the supply of and access to credit provided by financial institutions operating in the intervention zones, providing seasonal credit to the FBOs through commercial and rural banks as well as through non-traditional channels such as input suppliers and medium-term credit through banks to finance capital goods, such as irrigation and post harvest processing and storage facilities.

An agreement to this effect has already been signed between the Bank of Ghana and 24 banks (commercial, rural and savings and loans companies), giving them the accreditation to participate in the Agricultural Credit Programmes (ACP), under which $40.7 million credit facility is being made available for financing agricultural activities in the 23 intervention zones.

Facility

The ACP will be funded through a revolving, on-lending facility which is resident at the Bank of Ghana. Under it, participating financial institutions accredited by the Bank of Ghana will make credits available to FBOs who have been trained by MiDA and also micro, small and medium-sized enterprises engaged in production, transportation, storage, marketing, processing and related value-added activities involving high-value horticulture crops such as fruits and vegetables and staple crops including cereals and tubers.

In a complementary way, feeder roads are also being constructed, while others are being rehabilitated and according to MiDA, 950 kilometres of feeders roads in eight districts in the intervention zones are being constructed to reduce transportation costs and time to increase access to major domestic and international markets.

It is also to facilitate transportation linkages from rural areas to social service networks (including hospitals, clinics and schools).

In a complementary way, feeder roads are being constructed, while other roads are being rehabilitated and according to the Millennium Development Authority (MiDA), 950 kilometres of feeder roads in eight districts in the intervention zones are being constructed to reduce transportation costs and time to increase access to major domestic and international markets.

It is also to facilitate transportation linkages from rural areas to social service networks (including hospitals, clinics and schools).

Assessments

Mr. Eson-Benjamin said if roads were provided, then produce of farmers will not remain in the bush and go waste, stressing that strategic environmental assessment is currently being undertaken to see how building and rehabilitation of feeder roads will affect the people.

On the second leg of the MCA programmes, that is the Transportation Project itself, MiDA is in the process of upgrading sections of the national highway to reduce the bottleneck in accessing the International Airport and the Port of Tema and to support the expansion of Ghana’s export-directed horticulture base beyond current production.



"The 14-kilometre national highway between Tema and Accra is being developed into a three-lane dual carriage and it is expected to change the way people do business by facilitating assess to the airports and thus better the livelihood of people," Mr Eson-Benjamin stated.

In the same vein, 230 kilometres of trunk roads are under construction in the Afram Basin to facilitate growth of agriculture and access to social services. The Afram Plains, according to Mr. Eson-Benjamin, has so much water and fertile lands for agriculture but lacked the necessary access, hence the improvement of trunk roads to bring farmers close to town.

Many farmers are locked up in the hinterlands and it is difficult for them to bring their produce to areas where they can be marketed. To solve this problem MiDA is improving the Lake Volta Ferry Services, by facilitating the services of the Volta Lake Transport Company that connects Adawso on the southern shore to Ekye-Amanfrom on the northern shore of the Afram Plains.

Two ferries and landing terminals are being constructed in the areas identified, where foodstuff could be transported with other produce from the hinterlands. The third leg of projects under the compact is the Rural Services Project. Under it, MiDA is strengthening the capacity of public sector procurement, supporting community services and strengthening rural financial services.

The chief executive officer said the rural areas are generally deprived of basic infrastructure and as such people do not even want to take postings there, while those there especially the youth, are migrating fast to the cities. "To attract people to the rural areas, there is a need to provide good drinking water, boreholes, electricity to improve processing of food crops, the need to build good schools for children of both farmers and other citizens among others."

Under the Services Project, MiDA is supporting the development of procurement professionals and reinforcing the capacity of the government to procure goods and services. To this effect, MiDA is making available 2.3 million dollars to the universities to teach professional procurement to populate district offices.

In complementing the agricultural project, MiDA is funding the construction and rehabilitation of education, water and sanitation facilities, electrification of rural areas and building capacity of local institutions. "We want to also promote rural financing services, that is, to bring banks closer to the people", he said.

MiDA is currently helping to automate and interconnect 121 rural banks that are private, community-owned banks and provide other improvements in the national payments system that will draw a large number of people currently not served or under served in the financial system.

Benefits:

Under the Agricultural Project, approximately 51,000 farm households are expected to complete a comprehensive programme in agronomic, organisational and business skills training as members of FBOs. The project will also support the development and improved operations of approximately 120 small and medium sized enterprises providing services to agriculture where concentrations of farmer and FBO training will have taken place.

Increased access to credit, according to MiDA, will finance a majority of changes including irrigation and post-harvest infrastructure.

As a further measure to improve local profitability, the agriculture project under the compact will finance the improvement of 950 kilometres of feeder roads, which along with the trunk roads will benefit more that 120,000 farming households with over 600,000 members.

These activities will increase farm incomes from cultivation by $450 to about $11,000. For many of the poor, the compact intervention will represent an increase of one dollar or more in average income per person, per day, according to MiDA.

The transport project is also expected to open new economic opportunities for rural households by lowering transportation costs, including travel times, for both individuals and cargo, to markets and social service delivery points.

Budgets

Mr. Eson-Benjaman believes that MiDA can meet its targets "all things being equal", because MiDA does not depend on annual budgets that need parliamentary approval. Rather, its budget is already obligated.

"The chances of our workers and consultants doing their work with the assurance that they can be paid on time when they deliver the job is assured."

MiDA, he observed can still exist after the end of the five-year MCA compact with the USA, adding that "based on our performance, we can go to the multi- donor sector to solicit funds for other projects.

"Nothing stops us from going back to the United States to solicit for another compact," he added and hoped Ghanaians would support the Authority to achieve its objectives. The current compact ends in February 2012.

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