Fifty years after the very first ATM was installed outside a bank in London and completely changed the way consumers access cash and banking services, Builsa Community Bank (Bucobank) opened the first ATM at two of its branches in the small farming communities of Sandema and Fumbisi in the north of Ghana. These ATMs, the only ones in the district, are just one part of critical financial inclusion initiatives taking place to support agricultural enterprises operating in the region.
Spurred by the USAID Financing Ghanaian Agriculture Project (USAID FinGAP), established to facilitate financing for enterprises working in the maize, rice, and soy value chains in northern Ghana, Bucobank enrolled as one of the Project’s participating financial institutions in the pay-for-performance grant incentive program. As a grantee, Bucobank received technical assistance, capacity building training, and pay-for-performance grants to encourage increased lending to the agriculture sector. Bucobank has since disbursed approximately $2.3 million to 847 agricultural enterprises in the Upper East Region, enhancing and expanding the area’s agribusinesses.
The support from USAID FinGAP enabled Bucobank to open a fourth branch in 2016 in Yagaba, in the newly created Mamprugu Moagduri District of the Northern Region. Yagaba is a farming community that produces most of the maize, rice, soy and other grains and legumes consumed and traded in the Upper East and Northern Regions of Ghana. Until Bucobank opened the branch there, Yagaba had no local access to financial services, and community members had to travel over 30 kilometers to the next district to access banking services. Now, ten farmer-based organizations with 120 members have already accessed financing of $16,000 from the new Bucobank branch, facilitated by Tradeline Consult, a USAID FinGAP Business Advisory Service (BAS) provider.
As part of an innovative program to increase female-led enterprises’ access to financing, championed by USAID FinGAP’s “Gender and Financial Inclusion” training, Bucobank offered incentives such as reduced interest rates of 30% (5 points below market) and waived a 3% commitment fee and a 2% loan-processing fee to female-led agribusinesses and women’s groups seeking loans. Understanding that women often do not have collateral, but are reliable with loan repayments, the bank began accepting social guarantees against loans instead of collateral.
Since launching this new product, Bucobank has nearly doubled loans to female-led enterprises, from $256,522 in January 2015 to $410,515 in May 2017. Bucobank’s disbursements went to 502 (59% of the total) female-led enterprises, including women’s groups totaling over 5,000 members, all engaged in the production and aggregation of maize, rice, and soy for local consumption and sale to processors across Ghana.
“Financing from Bucobank has changed our living standards,” Grace Amaka, leader of Azue-Yeri Women’s Group which aggregates maize and rice, said. “We used to depend on our husbands for all our needs, but now we are able to cultivate our own fields and aggregate about three metric tons of paddy rice for sale to processors for income to cater to our needs and that of our children.”
The grant money received in exchange for high levels of lending was used to further support Bucobank’s much needed agricultural financing to micro borrowers, expand credit in northern Ghana, and enhance customer service delivery. In addition to the two ATMs, Bucobank purchased three Point of Sales (POS) machines and placed them with three major agro input dealers. Now agricultural enterprises have an easier way to pay for inputs purchased at those locations. For the input dealers, the POS help with cash flow and inventory management.
Bucobank also used the funds to establish an agricultural desk, hiring dedicated staff and training them on how to assess, distribute, monitor, and recover loans. The bank created two programs to encourage community members to save money through Electronic Susu Deposit and Child Education Savings. The programs worked to mobilize savings in a region where people do not usually do so. This year, these initiatives have benefited 542 agricultural enterprises and 450 non-agricultural enterprises, disbursed $1,051,891, and impacted 5,322 smallholder farmers.
“Through USAID FinGAP we have, in less than three years, been able to get to the level where it would have taken us a decade to reach,” Awudu Hayatudeen, General Manager of Bucobank, said. “Our relationship with USAID FinGAP has made it easy for us to access funds for on-lending and develop innovative products.
“Innovation is a game changer,” Hayatudeen concluded.
Those words couldn’t ring more true. Today there are over 3 million ATMs in use worldwide, enabling consumers to access funds and receive banking services at their convenience. In northern Ghana, the two new ATMs join the group, signaling that innovative financing programs, such as the ones implemented by Bucobank, are strengthening agribusiness, supporting smallholder farmers, and sustaining financial operations for the long term.