usaid fingap assessment of incentive grants and training ... · 3.8 sow question 4: how have...

MAY 2018

This publication was produced for review by the United States Agency for International Development/

Ghana mission by the Palladium Group.

ASSESSMENT OF INCENTIVE GRANTS’

AND TRAINING PROGRAMS’ IMPACT

ON INVESTMENT FACILITATION

FINANCING GHANAIAN AGRICULTURE PROJECT

(USAID FinGAP)

DISCLAIMER

This report is made possible by the generous support of the American people through the United States

Agency for International Development (USAID). The contents are the responsibility of the author and do not

necessarily reflect the views of USAID or the United States Government.

ASSESSMENT OF INCENTIVE GRANTS’

AND TRAINING PROGRAMS’ IMPACT ON

INVESTMENT FACILITATION

USAID FINGAP

MAY 2018

FINANCING GHANAIAN AGRICULTURE PROJECT (USAID FinGAP)

ASSESSMENT OF INCENTIVE GRANTS’ AND TRAINING PROGRAMS’ IMPACT ON INVESTMENT FACILITATION,

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CONTENTS

LIST OF TABLES 3

LIST OF FIGURES 4

ACRONYMS & ABBREVIATIONS 5

EXECUTIVE SUMMARY 6

1 INTRODUCTION 13

2 METHODOLOGY 13

2.1 Causal Logic Used for the Assessment 14

2.2 Sample Definition 17

2.3 Sample Composition and Response Rates of PFIs 20

2.4 Survey Tools Design 24

2.5 Pre-Testing of Survey Tools 26

2.6 Data Collection and Quality of Available Data 26

2.7 Data Collation, Analysis and Report Drafting 28

3 FINDINGS 29

3.1 Changes of PFIs’ Practices and Performances along the Results Chain 29

3.2 SOW Question 1A: How have practices and performances of PFIs changed as a result of the training programs? 32

3.3 P4P Grants 38

3.3.1 SOW Question 5A: Why have PFIs utilized grant payments to purchase

the goods and services that they have? 40

3.3.2 SOW Question 1b: How have practices and performances of PFIs

changed as a result of P4P grants received? 48

3.3.3 SOW Question 5b: What lessons can be learned for other FIs looking to

expand their engagement in agriculture? 53



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3.4 SOW Question 2: How have trainings and P4P grants enabled greater institutional focus on agriculture as a viable business line? 54

3.5 Features of USAID FinGAP Important for an Improved Capacity to Disburse

Agriculture Value Chain Financing 58

3.6 Changes of PFIs’ Practices and Performances at Medium-Term Outcome Level 63

3.7 SOW Question 3: How have trainings and P4P grants enabled PFIs to expand

their reach to new agribusinesses (and to other clients)? 71

3.8 SOW Question 4: How have trainings and P4P grants impacted the health of the

agriculture portfolios? 75

3.9 Will the Shift in the Way PFIs Disburse Agricultural Financing be Sustainable

even without USAID FinGAP Support? 79

4 IMPLICATION OF FINDINGS 81

4.1 Implications for Design and Delivery of PFI Trainings 81

4.2 Implications for Design and Delivery of P4P Grants 82

4.3 Implications for Assessing PFIs’ Changes of Practices and Performances of Value

Chain Financing 84

LIST OF TABLES

Table 1: Sample of PFIs by grant window ................................................................................................. 17

Table 2: Top five PFIs in terms of disbursement and SMiLEs ............................................................. 18

Table 3: Top five BAS providers in terms of financing facilitated and SMiLEs assisted .................. 19

Table 4: Interviews, online-survey and response rates ......................................................................... 21

Table 5: P4P grants leverage by type of PFI ............................................................................................. 40

Table 6: Top five PFIs ranked in terms of P4P grants leverage ........................................................... 41

Table 7. Intended P4P grant allocation (Proxy): Planned budget line items under Window 2 by 19

PFIs* ................................................................................................................................................................... 46



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LIST OF FIGURES

Figure 1: Performance Infographic USAID FinGAP ............................................................................... 14

Figure 2: Results chain for PFI trainings and P4P grants ....................................................................... 15

Figure 3: PFIs by type and by region in which PFI was interviewed ................................................... 20

Figure 4: Unique training participants and interviewed/ online-survey training

participants by type of PFI ........................................................................................................... 22

Figure 5: Unique training participants and interviewed/ online-survey training

participants by region ................................................................................................................... 23

Figure 6: Positions of PFI representatives in PoC meetings with PoCs separately, and when including other training participants ..................................................................... 23

Figure 7: Positions of interviewed/ online-survey training participants ............................................. 24

Figure 8: Rating of PFIs’ changes in disbursement of finance to maize, rice and soy

value chains after on-boarding with USAID FinGAP ............................................................. 30

Figure 9: Rating of training effect on an improved ability to disburse agriculture financing ......... 34

Figure 10: P4P grant utilization and perceived usefulness .................................................................... 47

Figure 11: Level of confidence that agriculture value chain financing is a viable way

to go, even without USAID FinGAP ........................................................................................ 55

Figure 12: Rating of Importance of USAID FinGAP features for an improved ability

to disburse agricultural financing .............................................................................................. 59

Figure 13: Change in size of PFIs' agriculture and maize, rice and soy value chain portfolios ..... 70

Figure 14: Overview on AGVCF disbursed to MRS value chains ....................................................... 72

Figure 15: Share of AGVCF disbursed to MRS value chain actors by type of PFI .......................... 74

Figure 16: Rating of effects on size and health of agriculture portfolio

after on-boarding with USAID FinGAP ................................................................................... 76

Figure 17: Level of agreement to which health of own portfolio can be attributed

to USAID FinGAP and/ or internal or other factors ........................................................... 78

Figure 18: Likelihood of changes in disbursing agricultural investment being sustainable,

even without USAID FinGAP .................................................................................................... 79



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ACRONYMS & ABBREVIATIONS

ADB Agricultural Development Bank

AGVC Agriculture Value Chain

AGVCF Agriculture Value Chain Financing

AODU Agribusiness Opportunities Development Unit

AOD Agribusiness Opportunities Development

BAS Business Advisory Service

DCA Development Credit Authority

FAA Fixed Amount Award

FI Financial Institution

FinGAP USAID Financing Ghanaian Agriculture Project

FNGO Financial Non-Governmental Organization

FSS Financial Sector Support

FSSU Financial Sector Support Unit

GAIP Ghana Agriculture Insurance Pool

GHC Ghana Cedi / Ghanaian Cedi

M&E Monitoring and Evaluation

MFI Microfinance Institution/ Microfinance Company

MRS Maize, Rice and Soy

NDA Zone Northern Development Authority Zone (prior SADA zone)

NPL Non-Performing Loan

NGO Non-Governmental Organization

P4P Grant Pay-for-Performance Grant (also known as Incentive Grant)

PFIs Participating Financial Institutions

PoC Point of Contact

RCBs Rural and Community Banks

SADA Zone Savannah Accelerated Development Authority Zone

SMiLEs Small, Medium, including Large Enterprises

S&L Savings and Loans Companies

TA Technical Assistance

USAID United States Agency for International Development



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EXECUTIVE SUMMARY The USAID Financing Ghanaian Agriculture Project (USAID FinGAP) addresses a key constraint

restricting the development of commercial agriculture and food security in Ghana – access to finance –

which is necessary to enable investment in agricultural value chains (AGVC). The project is now in its

fifth and final year and conducting an in-depth assessment to measure the impact of the generic and

institution-specific trainings, and the pay-for-performance grants (P4P grants) on 22 participating financial

institutions (PFIs).

METHODOLOGY

A results chain was developed as a theoretical basis for this assessment. The causal logic anticipates that

there are: 1) short-term outcomes within the first two years of PFI trainings and P4P grants’ utilization

and 2) medium-term outcomes which take three to five years to manifest.

The sample consisted of 22 PFIs (five commercial banks, nine rural and community banks, three savings

and loans companies, two credit unions, two microfinance institutions, one financial non-government

organization) and six business advisory service providers (BAS providers).

Empirical work was performed from mid-February to mid-April 2018 consisting of face-to-face

interviews, focus group discussions, and an online-survey. Twenty-five points of contacts (PoCs,

including alternates) were interviewed. Out of 550 unique training participants, 124 training participants

were interviewed or participated in the online-survey.

The Scope of Work (SoW) questions to be addressed by the assessment were:

1. How have the practices and performances of these PFIs changed as a result of the P4P

grants and training programs received? The question is broken down into two questions to

capture effects of trainings and grants, separately.

2. How have P4P grants and training enabled greater institutional focus on agriculture as a

viable business line?

3. How have P4P grants and training enabled PFIs to expand their reach to new agribusiness

(and perhaps to other) clients?

4. How have P4P grants and training impacted the health of the agricultural portfolios?

5. Why have PFIs utilized the grant payments to purchase the goods and services that they

have, and as a result, what lessons can be learned for other FIs looking to expand their

engagement in agriculture? The question was broken down into two questions to capture

the “why” and the lessons, separately.



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FINDINGS

Changes of PFIs practices and performances along the results chain (Chapter 3.1):

The assessment finds evidence for improvements in PFIs’ practices and performances. After on-boarding

with USAID FinGAP, there is a causal chain of short-term and medium-term outcomes resulting from

"improved capacities of PFIs to disburse agricultural value chain financing [AGVCF] to MRS value chains".

PFI trainings and P4P grants contributed to these improved capacities. The top ranked outcome by PFIs

is increased size of their agriculture portfolios. This is in-line with the project’s purpose: increased

investment in agriculture.

The top three outcomes on which PFIs perceived USAID FinGAP had a “strong effect” are:

(1) Increased size of agricultural portfolio

(2) Improved agribusiness customer relationship management

(3) Improved monitoring of borrowers

The bottom ranked outcomes with the lowest shares of “strong” ratings for the perceived effect of

USAID FinGAP are:

Improved loan repayment in MRS value chains

New product development targeted at lending to AGVC

Improved risk mitigation

Improved health of agricultural portfolio

The bottom ranked outcomes are reflective of the three to five year-horizon for medium-term

outcomes to accrue. USAID FinGAP has a five-year duration. PFIs on-boarded under Window 1, those

with grant agreements that became effective in 12/2014, would be the ones beginning to see medium-

term outcomes starting to manifest. For Window 2 PFIs, those with grant agreements that became

effective 2015 and later, it is too early yet to see these medium-term outcomes.

How have practices and performances of PFIs changed as a result of training programs

received (SoW question 1a; Chapter 3.2):

There is evidence that PFI trainings helped PFIs to increase technical capacities to disburse AGVCF and

PFIs put internal structures in place to institutionalize AGVCF. In terms of trainings, PFIs were not

required to dedicate specific staff members for agric. lending and designate them to attend the

institution-specific trainings. A more systematic training of dedicated staff as well as building up trainers

inside PFIs can reinforce PFIs’ technical capacities in AGVCF more systematically.

Respondents confirmed the generic and institution-specific trainings improved the ability of PFIs to

disburse AGVCF. Especially, the institution-specific trainings appear to have had a “strong

effect” on their ability to increase lending to SMiLEs. These trainings were tailored to the individual

PFI’s needs. More staff members were able to attend, including more representatives of higher-level

management. Staff felt they could be more open without exposing confidential information to other PFIs.



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Trainings have reduced the turnaround time for appraisal and approval, improved disbursement of loans

and monitoring of borrowers, enhanced agribusiness customer relationship management, and enabled

new financial product development targeted at lending to agriculture value chains. This contributed to

improvements of medium-term outcomes such as improved risk mitigation, improved confidence of PFIs

that AGVCF is a viable business line, increased size of MRS value chain portfolios, and improved loan

repayment in MRS value chain portfolios as well as increased size and health of PFIs’ agric. portfolios.

Why have PFIs utilized grant payments to purchase the goods and services that they have

(SoW question 5a; Chapter 3.3.1):

The assessment finds evidence for the proof of concept of the P4P grant: The key development

hypothesis in the SoW stating, “Smart incentives can motivate financial institutions to expand agricultural

financing,” can be confirmed by the leverage of AGVCF through the P4P grants, and the condition in the

grant agreement that the financing should not include financing that would otherwise be made in the

absence of the grant.

The four top priorities to which PFIs allocated grant money and which they also perceived as most

useful to improving their capacity in AGVCF are:

(1) Monitoring logistics. PFIs were (are) under-resourced. It enabled them to increase and

improve loan monitoring and credit supervision.

(2) Training of in-house staff and/or training of SMiLEs. Training of in-house staff helped PFIs

to build up agric. teams and to improve confidence, motivation and ability to disburse loans. Training

of SMiLEs enabled PFIs to develop relationships and establish linkages among value chain actors for

risk mitigation to improve loan recovery rates.

(3) Pay-for-performance of staff (bonuses/incentives, salaries and staff allowances). It

motivates staff and financially rewards them for an improved performance of their work.

(4) IT and communication hardware. PFIs were (are) under-resourced. The equipment

motivated and enabled staff to better perform their work, also from out-of-office locations and to

automate operations.

How have practices and performances of PFIs changed as a result of P4P grants received

(SoW question 1b; Chapter 3.3.2):

There is evidence that the items purchased utilizing the P4P grant were very important for the majority

of PFIs to improve their ability to disburse agriculture loans, including MRS AGVCF. The qualitative

statements confirm short-term outcomes of P4P grants: Respondents confirmed there is an improved

turnaround time for loans appraisal and approval. They improved disbursement of loans and improved

their monitoring of borrowers and witnessed an improved agribusiness customer relationship

management, and new financial product development targeted at lending to agriculture value chains. This

contributed to improvements at the level of medium-term outcomes such as improved risk mitigation,

improved confidence of PFIs that AGVCF is a viable business line, increased size of MRS value chain

portfolios and improved loan repayment in MRS value chain portfolios as well as an increased size of

PFIs agric. portfolios and an improved health of the agric. portfolios.

Improved disbursement of loans was constrained by availability of competitive funding: Ten out of 22

PFIs expressed the need to access competitive AGVCF to lend to their customers. They reported



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constraints in lending either because of too high demand from their customers or too high interested

rates of funds for on-lending. Four PFIs reduced interest rates of lending to MRS value chains, which

helped them to get new clients and increase their disbursements.

What lessons can be learned for other FIs looking to expand their engagement in

agriculture (SoW question 5b; Chapter 3.3.3):

Six lessons learned were identified:

(1) Evidence from improved monitoring can increase a PFI’s confidence to continue

disbursing AGVCF when the improved monitoring contributes to improved loan

repayment rates in MRS value chains. A consistent allocation of adequate monitoring logistics

and monitoring training and staff bonuses/ incentives over a three- to five-year timeframe is a useful

blend of inputs.

(2) Using P4P grants to set up agric. desks for targeted customers appears to be

successful when sufficiently staffed with a dedicated team that is well-trained and equipped, framed

with an agric. lending policy and with buy-in from senior management.

(3) Streamlining operational policies and procedures to effectively and efficiently

minimize operational costs enabled PFIs to reduce interest rates to lend to MRS value

chains, increase their clientele base and their disbursement of loans.

(4) P4P bonuses/ incentives to staff: A useful utilization of grants appears to have been a

blending of performance-based payment and in-house training for staff.

(5) Using Grants to sensitize and reach out to existing and potential SMiLEs appears to

be particularly effective, when trainings are also used to strategically link value chain actors.

(6) In financial product development, conducting proper market research and pilot-testing

of the product prior to roll-out can help prevent products from failing.

How have trainings and P4P grants enabled greater institutional focus on agriculture as a

viable business line (SoW question 1b; Chapter 3.4):

Institutionalization was measured by:

(1) PFIs’ level of confidence that AGVCF is a viable way for them to go, beyond USAID FinGAP

support: Most responses confirm PFIs are either “very confident” or “confident” that agriculture is a

viable business line for them.

(2) whether PFIs have an agric. unit/ desk with dedicated staff and financial resources;

(3) whether PFIs have an agric. lending policy;

(4) whether PFIs have special agric. loan products;

(5) whether PFIs have sufficient access to AGVCF for on-lending

There is evidence of institutionalization along these parameters among the sample PFIs, but not all PFIs

have parameters 2-5 in place. Additionally, the lack of AGVCF is a critical issue for a greater institutional focus on agribusiness as a viable business line.



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How have P4P grants and trainings enabled PFIs to expand their reach to new agribusiness

(and perhaps to other clients) (SoW question 3; Chapter 3.7):

MRS portfolios of PFIs have increased in terms of new loans disbursed and new agribusiness clients.

Fifty-five percent of these loans were disbursed to input dealers, 20% to agriculture producers, 12% to

output processors, 11% to traders, and 2% to other. There is evidence that trainings and P4P grants

enabled PFIs to expand their reach to new agribusinesses through two key avenues: 1) the AGVCF

approach promoted by the project; and 2) USAID FinGAP’s confidence- and capacity-building efforts to

encourage PFIs to venture into AGVCF.

How have trainings and P4P grants impacted the health of the agriculture portfolios (SoW

question 4; Chapter 3.8):

Trainings and P4P grants have improved capacities of PFIs to disburse AGVCF and this contributed

(through a series of other short- and medium-term outcomes) to an improved health of PFIs’ agric.

portfolios. USAID FinGAP has facilitated a considerable increase in loans disbursed by PFIs to MRS value

chain SMiLEs and PFIs confirm the “strong effect” on the increase of the agric. portfolio. However, the

share of those PFIs already seeing an “improved health of the agriculture portfolio” is less than half of

PFIs. For Window 2 PFIs, it appears to be too early to see more of this medium-term outcome.

IMPLICATIONS OF FINDINGS

The key development hypotheses upon which USAID FinGAP was designed can be confirmed with

evidence (Chapter 3). USAID FinGAP’s grants and trainings affected PFIs’ operations, “beyond new

financing out the door”:

The smart incentives (P4P grants) motivated the 22 PFIs to increase their agricultural financing.

The proof of concept is established. But it appears that it needs to be more established for

Window 2 PFIs in terms of improved loan repayment rates.

Technical capacities to disburse AGVCF have improved with the support of PFI trainings and

P4P grants, and PFIs have started to put internal structures in place. But PFIs do not have all

parameters in place considered relevant for institutionalization of AGVCF.

For most respondents from PFIs, it is very likely/ likely that the changes in how they disburse

agricultural loans, including MRS value chains are sustainable. But they also expressed the need

for further training and additional grants (cf. Annex 11). If there is an extension of USAID

FinGAP or a follow-on, this will be an important window of opportunity to ensure that the

current momentum is carried forward to help more PFIs progress more towards medium-term

results.

Access to competitive AGVCF to lend to their customers is an issue for PFIs affecting

sustainability of changes in practices and performances.



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Implications for design and delivery of PFI trainings

1) Design of a six-month curriculum on AGVCF: A six-month curriculum in which PFI staff

are regularly away for training, offering a blend of presence-based and online trainings, field visits

and study visit(s) abroad can be a more systematic way to build strong capacities of PFI staff,

designated by the PFI with the commitment to stay on for the six-month training and dedicated

for agric. finance.

2) Matching internal PFI staff with a USAID FinGAP training specialist/ external

trainer of AGVCF (ToT in AGVCF). PFIs explicitly requested/ suggested the training-of-

trainers. The USAID FinGAP training specialist, FSSU manager, and external trainers could be

teamed up with internal staff of PFIs to conduct trainings. Over time the matching can enable

the internal PFI staff to run the trainings independently with external support.

3) Additional institution-specific trainings for PFI staff: There is a considerable demand for

more institution-specific trainings in all PFIs. In the case of a follow-on to USAID FinGAP, Annex

11 includes training topics in which PFIs have identified additional gaps to be addressed.

Additional training for PFI staff ranked equally high in demand to an extension of a P4P Grant.

4) More training for SMiLES: PFIs see the benefit of training their customers and the effect it

has on their loan repayment.

Implications for design and delivery of P4P grants

(1) In case of a follow-on to USAID FinGAP with money allocated to continue with P4P

grants: Among the 22 PFIs, there is an equally high demand for additional grants and additional

institution specific trainings of staff (cf. Annex 11). Priorities for which further grant support would

be needed:

Acquire (additional) vehicles/ motorbikes and other logistics for loan monitoring

Motivational packages (bonuses/ incentives, allowances) to officer directly involved in the

appraisal, disbursement, monitoring and recovery of loans

IT hardware, and financial reporting software for automation of operations

Setting up a warehouse facility for storage to help SMiLEs to deposit their produce at a

fee to manage post-harvest losses and benefit from future high prices

Purchasing/ subsidizing of mechanization equipment to be provided to customers at a fee

(2) An increased grant share of loans disbursed for financial institutions which are not

commercial banks, because they have a higher risk of direct agriculture lending.

(3) P4P Grant with built-in "Retention Incentive": A design option for a new grant would be

to consider a good recovery rate as an additional incentive should a follow-up project (for example,

FinGAP 2) decide to continue to work with the current 22 PFIs. "Increased disbursement" alone is

not enough to reflect the medium- and long-term sustainability of AGVCF: if non-performing loans

are rising, PFIs are challenged to proceed to increase disbursement.

(4) Grant share calculated using different parameters, apart from only looking at

amount disbursed: In the sample, the five commercial banks disbursed most of agricultural



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disbursements to 52 out of 2,626 SMiLEs and mostly to input dealers. While other types of PFIs

disbursed smaller financial amounts, they reached more SMiLEs and had higher percentages directly

disbursed to agricultural producers which is considered riskier lending. A design-option for

consideration of a P4P grant can be to look at additional parameters apart from "amount disbursed".

(5) Special insurance package directly provided through USAID FinGAP itself to cover

production loans to give financial institutions more confidence to disburse to agricultural

producers.

(6) Risk mitigation fund for financial institutions having a higher risk compared to commercial

banks from direct agricultural lending to primary producers.

(7) Agriculture Value Chain Finance Facility providing access to competitive funding for

financial institutions to enable them to lend to their customers at lower interest rates and at longer

tenure.

(8) Extension of grant coverage for additional crops and additional geographical

regions.

(9) Demand from additional financial institutions for capacity building in AGVCF.

Implications for assessing PFIs’ changes of practices and performances in AGVCF

An assessment like this one, aiming to measure PFIs’ changes of practices and performances in

disbursement of value chain financing, benefits from a results chain developed at a project’s design stage.

Thus, when a future project intends to do a similar assessment, the results chain used in this assessment

can be reviewed/ revised in a participatory approach. Outcome indicators should be assigned to each

outcome to enable a tracking of changes of PFIs’ practices and performances with more quantitative

indicators than in this assessment in which the results chain was designed at the time of the assessment.



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1 INTRODUCTION

The USAID Financing Ghanaian Agriculture Project (USAID FinGAP) addresses a key constraint

restricting the development of commercial agriculture and food security in Ghana – access to finance –

necessary to enable investment in agricultural value chains. The project is now in its fifth year and

conducting an in-depth assessment to measure the impact of the generic and institution-specific

trainings, and the pay-for-performance grants (P4P grants) on 22 participating financial institutions (PFIs).

This report presents the results of the assessment performed in-country from mid-February to mid-

April 2018.

2 METHODOLOGY

The Scope of Work (SoW) questions to be addressed by this assessment were:

1. How have the practices and performances of these PFIs changed as a result of the P4P

grants and training programs received? (cf. Chapter 3.2)

2. How have P4P grants and training enabled greater institutional focus on agriculture as a

viable business line? (cf. Chapter 3.3)

3. How have P4P grants and training enabled PFIs to expand their reach to new agribusiness

(and perhaps to other) clients? (cf. Chapter 3.7)

4. How have P4P grants and training impacted the health of the agric. portfolios? (cf. Chapter

3.8)

5. Why have PFIs utilized the grant payments to purchase the goods and services that they

have, and as a result, what lessons can be learned for other FIs looking to expand their

engagement in agriculture? The question is broken down in two questions (cf. Chapters

3.3.2, 3.3.3) to capture the “why” and the lessons, separately.

While the SoW questions are addressed, the achievements are integrated into the bigger picture of

USAID FinGAP to take account of the comprehensive approach of the project (cf. Chapters 3.5, 3.6).



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2.1 CAUSAL LOGIC USED FOR THE ASSESSMENT

The key development hypotheses upon which USAID FinGAP was designed1 are that "smart incentives

can motivate financial institutions (FIs) to expand agricultural lending and investment, and that once

proof of concept is established, technical capacity is built, and necessary internal structures are put in

place, incentives will no longer be necessary to sustain long-term engagement. […] The utilization of

grants and provision of generic and institution-specific trainings have supported a greater institutional

focus on agriculture as a viable business line and enabled FIs to expand their outreach to new clients, as

evidenced by the USD 158 million in new finance and investment that has been released by FIs to date as

a result of the grants and technical capacity building." The Scope of Work formulates that "through this

assessment we seek to better understand the impact of these grants and trainings on FI operations,

beyond new financing out the door".

USAID FinGAP uses a comprehensive and integrated approach to facilitate agriculture-related

investment into maize, rice and soy (MRS) value chains (cf. Figure 1).

1 USAID FinGAP (2017): Scope of Work for this assessment. Background. p1.

Source: USAID FinGAP, Status 03/ 2018

Figure 1: Performance Infographic USAID FinGAP



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For a better understanding of the impact of the pay-for-performance (P4P) grants and trainings, a results

chain (cf. Figure 2) was developed as a theoretical basis for this assessment. 2 The causal logic anticipates

that there are (1) short-term outcomes within the first two years of PFI trainings and P4P grants

utilization and (2) medium-term outcomes within three to five years.

The dark blue boxes reflect the SoW for the assessment. The light blue boxes shall help to put the SoW

into the broader context of USAID FinGAP's purpose and USAID/ Ghana's Feed the Future

Intermediate Result. The goal of USAID FinGAP is to establish the basic commercially-driven agricultural

development services critical to sustainably reducing food insecurity. The five-year project's purpose is

increased investment in agriculture.3 It contributes to the long-term outcomes4 defined under USAID/

2 Optimally, a project result chain is developed in a participatory approach at the design stage of an intervention

together with a results framework with short-term and medium-term outcome indicators, baseline and target values.

It has a causal chain of anticipated changes in practices and performances resulting from access to and use of outputs.

3 USAID/ Ghana Contract No. AID-641-C-13-00002, p. 15

4 In Monitoring and Evaluation, the terms long-term outcome, impact or development outcome are used

synonymously. For example, the Sustainable Development Goals reflect development outcomes. "Impact is the final

result of the (project development) outcome, which most likely will become evident several years after the project

activities have been completed." (World Bank, 2014: Results Framework and M&E Guidance Note, p. 1) "The USAID

Automated Directives System (ADS) 203 defines impact evaluations as those that measure the change in a

Figure 2: Results chain for PFI trainings and P4P grants



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Ghana's Feed the Future Intermediate Result 1 "Increase the competitiveness of rice, maize, and soya

value chains in ways that foster broad based and sustained economic growth", which contributes to

USAID/ Ghana's Development Objectives. The causal logic used for this assessment anticipates that:

(1) Short-term outcomes of PFI trainings and P4P grants utilization are improved

capacities of PFIs to disburse AGVCF which are expected to lead – within one to two years – to

an improved turnaround time for appraisal and approval of loan applications, improved

disbursement of loans, improved monitoring of borrowers, improved agribusiness customer

relationship management (CRM) and new products developed targeted at AGVCF.

(2) Medium-term outcomes of PFI trainings and P4P grants utilization are anticipated

to show an increased size of PFIs maize, rice, and soy (MRS) value chain portfolios and improved

loan repayment in PFIs’ MRS value chain portfolios. Improved risk mitigation in agriculture

lending is considered to be an outcome of improved capacities but expected to take longer time

to manifest and reinforced by the other short-term outcomes (for example, improved

monitoring or improved agribusiness CRM). Thus, in the results chain it is positioned on the

verge of a short-term to medium-term outcome. An increased confidence of PFIs that AGVCF is

a viable way to go, even without USAID FinGAP support, is anticipated to be both, a result of

improved capacities and improved risk mitigation. It is reinforced by an improved loan

repayment in MRS value chain portfolios of PFIs. Increased confidence and improved loan

repayment are considered to reinforce the propensity of PFIs to increase the size of the MRS

value chain portfolios. Improvements in loan repayment are anticipated to take more time to

manifest once PFIs have increased their investments. However, improvements in loan repayment

are anticipated to be critical to sustain an increase in agricultural investments in the long-run. An

increased size of PFIs’ MRS value chain portfolios may not automatically lead to an increased size

of the agriculture portfolio of a PFI5.

These reflections formed the basis for the design of questions in the survey tools.

development outcome that is attributable to a defined intervention. Impact evaluations are based on models of cause

and effect and require a credible and rigorously defined counterfactual to control for factors other than the

intervention that might account for the observed change. (USAID, 2013: Technical Note Impact Evaluations, p. 1)

5 An increased size of the MRS value chain portfolio may not automatically lead to an increased size of the agriculture

portfolio for two reasons: (1) maize, rice and soy might not be the only crops in the PFIs’ agriculture portfolios; (2)

the agriculture portfolio definition by the Bank of Ghana which is used by PFIs to measure the size of their agriculture

portfolio. The definition of agriculture by the Bank of Ghana covers more primary producers, while the value chain

portfolio definition by USAID FinGAP covers all value chain actors (input dealers, primary producers, output

processors, traders and others). Thus, when PFIs increase their agric. lending to value chain actors other than primary

producers, the MRS value chain portfolio has increased, while this might not be reflected in the measurement of the

agriculture portfolio.



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2.2 SAMPLE DEFINITION

The Scope of Work required an engagement with at least 25 PFIs. Three PFIs were dropped from the

sample, because they had not disbursed to qualify for grant payout (Heritage Bank, Best Point Savings

and Loans Ltd, Ghana Commercial Bank).

The sample consisted of 22 PFIs (cf. Table 1) which had received pay-for-performance (P4P) grants for

disbursing loans to MRS value chains in the target regions of USAID FinGAP, and had participated in

generic and/ or institution-specific trainings. This sample included five commercial banks, three savings

and loans companies, nine rural and community banks, two credit unions, two microfinance companies

and one financial non-government organization. Their 22 Points of Contact (PoCs) and 550 unique

training participants were the target groups for this assessment.

Table 1: Sample of PFIs by grant window

Window 1 and 2 Grantees Window 2 Grantees Limited Solicitation Grantees

under Window 2

Barclays Ghana Ltd

Bonzali Rural Bank

Builsa Community Bank Ltd

Center for Agricultural Rural

Development Financial NGO

Ecobank Ghana Ltd

Sinapi Aba Savings & Loans Ltd

Stanbic Bank Ghana Ltd

Success For People Microfinance Ltd

Tumu Community Cooperative Credit

Union

Bessfa Rural Bank Ltd

Borimanga Rural Bank Ltd

Fidelity Bank Ghana Ltd

First Allied Savings and Loans

Ga Rural Bank Ltd

Kintampo Rural Bank Ltd

Lawra Area Rural Bank Ltd

Microfin Rural Bank Ltd

Nalerigu Community Cooperative

Credit Union

Nationwide Microfinance Ltd

Okomfo Anokye Rural Bank Ltd

Agricultural Development Bank

IFS Financial Services Ltd

9 PFIs 11 PFIs 2 PFIs

Out of the sample:

Nine PFIs received P4P grants under Window 1 and 26 with grant agreements under Window 1

effective as of 12/2014. At the start of this assessment (February 2018), the nine PFIs were 38

months into the project.

Eleven PFIs received grants under Window 2 with grant agreements effective as of 12/2016. At

the start of the assessment, the eleven PFIs were 14 months into the project.

6 Window 1 was open from 06/2014 to 04/2016. Grant agreements were ready in 12/2014. Window 2 was open

from 06/2016 to 04/2018. Grant agreements were ready in 12/2016. The Limited Solicitation Grant was opened in

04/2017, when grant money was reallocated from available Window 2 grants of PFIs which had not fully met

disbursement milestones to draw down their entire grant amount.



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18 | P a g e

Two additional PFIs received a Limited Solicitation Grant under Window 2 with grant

agreements effective as of 04/2017. At the start of the assessment, the two PFIs were 10

months into the project.

Table 2 shows that by the start of the assessment, in total, the 22 PFIs had disbursed USD 108,563,478

(70%) of all AGVCF to 2,626 SMiLEs (96%) after on-boarding with USAID FinGAP (cf. Annex 7 for more

quantitative data from the M&E system).

Table 2: Top five PFIs in terms of disbursement and SMiLEs

By share of total

disbursement USD

% of

sample

PFIs

By share of SMiLEs

disbursed to Number

% of

sample

PFIs

Barclays Bank 56,864,063 52.4 Builsa Community Bank

Ltd

710 27.0

Ecobank 12,235,912 11.3 CARD FNGO 272 10.4

Agricultural Development

Bank

9,237,429 8.5 Bessfa Rural Bank 265 10.1

Fidelity Bank 5,589,632 5.1 Sinapi Aba Trust Savings

and Loans

193 7.3

Tumu Community

Cooperative Credit Union

5,084,411 4.7 Bonzali Rural Bank 187 7.1

% of all

FinGAP

% of all

FinGAP

Top five PFIs 89,011,447 57.0 1,627 59.7

Sample of 22 PFIs 108,563,478 69.6 2,626 96.3

All USAID FinGAP 156,085,031 100.0 2,726 100.0

Source: USAID FinGAP: Data from M&E system, status 02/2018.

In terms of disbursement, the top five PFIs of the sample accounted for 57% of all disbursements by all

PFIs under FinGAP. Four of them are commercial banks and one credit union. In terms of number of

SMiLEs, the top five PFIs are two rural and community banks, a financial NGO and a savings and loans

company. They provided financing to 60% of all SMiLEs.

The assessment included six BAS providers who participated in generic trainings with PFIs:

Five of them are the most active BAS providers in facilitating financing to SMiLEs and number of closed

deals (Table 3). Lifecare was chosen additionally because it is the only BAS provider in the Upper West.

The top five BAS providers facilitated 49% of the loans facilitated by all 50 BAS providers and 13.1% of

all loans to SMiLEs under FinGAP. They facilitated 75% of all deals facilitated to SMiLEs by BAS providers

which account for 7% of all deals with SMiLEs under USAID FinGAP.



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Table 3: Top five BAS providers in terms of financing facilitated and

SMiLEs assisted

Total BAS provider financing

facilitated to SMiLEs

Closed deals facilitated to

SMiLEs

Name of BAS provider USD % of all BASP Number % of all BASP

Solutions Consulting 10,779,091 25.8 47 17.5

Business Financial Consult (BFC) 6,529,363 15.6 6 2.2

Tradeline Consult 1,774,298 4.2 64 23.8

MEL Consult 1,125,498 2.7 23 8.6

SAHA Consulting 257,828 0.6 61 22.7

% of all FinGAP % of all FinGAP

Grand total due to 5 BAS

providers' facilitation

20,466,078 13.1 201 7.4

Grant total due to all (50)

BAS providers' facilitation

41,827,877 26.8 269 9.9

All USAID FinGAP 156,085,031 100.0 2,726 100.0




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2.3 SAMPLE COMPOSITION AND RESPONSE RATES OF PFIS

Figure 3 shows the interviewed PFIs by type of PFI and region where the interview took place. Rural and

community banks (41%) and commercial banks (23%) form the majority of the sample PFIs.

USAID FinGAP works with SMiLEs in the MRS value chains, which are physically located in the Northern

Development Authority Zone (NDA Zone)7 or through their operations pull demand for maize, rice

and soy from the NDA Zone. It shows that 36% of the interviewed PFIs disbursing AGVCF to these

SMiLEs are directly located with their head offices in the NDA Zone. The remaining 64% PFIs have

branch offices and/ or agencies in the NDA Zone.

Meetings were held with all 22 PFIs (cf. Table 4). Twenty-five PoCs and/ or alternate PoCs (as

designated by the PoC) were interviewed on the P4P grants and trainings. Three of them had

not participated in trainings. There were 550 unique training participants and it was planned to get

responses from at least 20-25% of them through interviews/ focus groups and an online-survey. One-

hundred twenty-four training participants responded (actual response rate: 22.6%). The

response rate is considered sufficient to make statements on the effects of trainings on PFIs' change of

practices and performances. Sixty-one training participants were interviewed, among them 22 PoCs.

Sixty-three training participants responded to the online-survey in which the majority of responses came

from rural and community banks (44%) and from savings and loans companies (38%). Commercial banks'

training participants are underrepresented in the online-survey (cf. Annex 9 for detailed data on the

total number of unique training participants and respondents).

7 The NDA Zone was previously named SADA Zone (=Savannah Accelerated Development Authority zone). It

comprises the Upper West, Northern and Upper East regions, above the 8th parallel.

Figure 3: PFIs by type and by region in which PFI was interviewed



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Table 4: Interviews, online-survey and response rates plan actual male female

Points of Contact interviewed, including alternate Points of

Contact as designated by the PoCs (number) 22 25* 21 4

- Share of PoCs interviewed, incl. alternate PoCs (%) 100% 84% 16%

- Share of PoCs/ alternate or initial PoCs who

participated in trainings

-- 22 19 3

Total responses from training participants (number) 110-138 124 89** 34**

Total responses from training participants (%) 20-25% 22.6% 71.8%** 27.4%**

Training participants interviewed (number) 61 42 19

Training participants responding to online-survey (number) 63 47** 15**

BAS providers interviewed (number) ( 5 6 5 1

Meetings with PoCs separately (number) 11

Meetings with PoCs and incl. training participants (number) 11

- Training participants interviewed (number) 46

Meetings with only training participants (number) 6

- Training participants interviewed (number) 15

Meetings with BAS providers (number) 3

Phone interviews with BAS providers (number) (3)

Total face-to-face meetings (number) 31

*including alternate PoCs; ** One respondent skipped this question.

Selection criteria of training participants for interviews and focus group discussions: In the

Inception Phase, training participants were selected from a file from the USAID FinGAP M&E system

containing all trainings up to 02/2018, institutions, training participants and gender. Criteria applied were

as follows:

Selection of those training participants who attended most trainings

Ensure a balanced share of male/ female training participants

Number of training participants for interviews/ focus groups based on total number of unique

training participants per PFI:

Unique training participants Number to be interviewed/ focus groups

- for up to 10 unique training participants: - selection of 2 training participants

- 11 to 20 unique training participants: - selection of 3 training participants



- 41 and more unique training participants - selection of 6 training participants

if the PoC was not part of a training, he/ she could be interviewed individually



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22 | P a g e

if the PoC could not mobilize the proposed composition of training participants, then a

replacement could be proposed by the PFI

Figure 4 compares the share of unique training participants by type of PFI (550) and the number of those

who were interviewed or took part in the online-survey (124). The staff from rural and community

banks formed the largest share of unique training participants (42%) and the largest share of training

participants responding via interviews/ focus groups or online-survey (49%). While 26% of training

participants came from commercial banks, they are only 9% of the training participants who responded.

Figure 5 compares the share of training participants by regions from which training participants attended

USAID FinGAP trainings and from which they were interviewed or responding to the online-survey.

While 28% of the training participants came from the NDA Zone, they form 51% of the training

participants who were interviewed or responded to the online-survey. Greater Accra training

participants are underrepresented due to their low response rate.

Figure 4: Unique training participants and interviewed/

online-survey training participants by type of PFI



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23 | P a g e

The meetings with PoCs addressed questions on the P4P grant and its effect on changes in practices and

performances inside the PFI after on-boarding with USAID FinGAP, which only PoCs or managing staff

in the PFI would have been able to answer. These meetings were scheduled with PoCs separately (11

meetings), or when they invited some training participants to the meeting, included training participants

(11 meetings). Figure 6 shows these 22 meetings had a good representation of PFI staff in managing

positions (66%) who were able to speak to the grant issues: 28% of interviewed persons are managers,

19% general managers or their deputies, and CEOs, and 19% were heads of units or departments. The

sample included 17% of interviewed staff with agric. related specifications: Heads of agric. units or

departments (5), agric. finance relations managers (2), agric. specialist and agric. coordinator (each 1).

Figure 5: Unique training participants and interviewed/ online-survey

training participants by region

Figure 6: Positions of PFI representatives in PoC meetings with

PoCs separately, and when including other training participants



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24 | P a g e

There were six meetings at PFIs only with training participants, attended by 15 staff at four RCBs, one

credit union, and one FNGO. The online-survey for training participants had 63 responses. Figure 7

shows a summary of their positions. Half of the respondents are officers (51%), while 29% of staff were

in managing positions.

Figure 7: Positions of interviewed/online-survey training

participants

2.4 SURVEY TOOLS DESIGN

Survey tools (contents summarized below) consisted of an interview questionnaire for interviews

with PoCs (cf. Annex 4). A separate questionnaire was designed for interviews and focus group

discussions with training participants only (cf. Annex 5). It did not have specific P4P grant-related

questions. Both questionnaires were designed as online-tools (Survey Monkey) in which the Consultant

could enter notes from the interview. The online-survey for training participants had the same

questions as the questionnaire for the interviews and focus group discussions with training participants,

only. The survey tools were based on the causal logic of the results chains designed for the assessment

(cf. Figure 2).

BAS provider interviews followed a set of predefined questions.

The design of the survey tools was participatory. Based on draft survey tools shared by the Consultant

in the Inception Report, the USAID FinGAP COP/ FSSU Manager and the Agri-finance Training

Technical Specialist provided feedback upon which the questions were reviewed and revised. The team

also provided inputs for the finalization.

Main topics identified for the interviews with PoCs (and/ or alternate PoCs):

Rating the importance of features of USAID FinGAP which were important to improve the

interviewed person(s) ability to disburse agriculture loans

Scoring the perceived effect USAID FinGAP has had on changing the PFI's disbursement of

agricultural loans to MRS value chains after on-boarding with USAID FinGAP



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25 | P a g e

P4P grant-related data, including how much of the grant was utilized by end of Feb. 2018, and

for which cost categories the grants were utilized to purchase goods and services; which of

these were most useful and why; how these items changed (contributed to change) the way

agricultural investments are disbursed; what is good/ could be improved about the P4P grant

Training-related data: Scoring the effect of generic and institution-specific trainings on improving

the interviewed persons' and other PFI training participants ability to disburse agricultural loans;

how these trainings changed (contributed to change) the way agricultural loans are disbursed

Change in the agriculture and MRS portfolios since the PFI joined USAID FinGAP

Opinion on the extent to which the health of the PFI's portfolio can be attributed to the

partnership with USAID FinGAP and its individual components, or institution-specific internal or

external factors, or whether the institution would have made the loans anyway

Sustainability of changes without USAID FinGAP support; level of confidence whether AGVCF is

the way to go without USAID FinGAP support

How USAID FinGAP enabled the PFIs to reach new agribusinesses and other clients

Requesting suggestions from the respondents where AGVCF should be further supported in

their institutions and at the financial sector level

Main topics identified for focus group discussions/ interviews with training participants only

(which is the same as the online-survey for training participants):

Training-related data: Number of generic and institution-specific trainings in which the

respondent(s) participated; Scoring the effect of generic and institution-specific trainings on

improving the respondent's ability to disburse agricultural loans; how these trainings changed

(contributed to change) the way agricultural investments are disbursed



How USAID FinGAP enabled the respondent to reach new agribusinesses and other clients

Scoring the effect USAID FinGAP is perceived to have had on changing the respondent's

disbursement of agricultural loans to MRS value chains after on-boarding with USAID FinGAP

Opinion on the extent to which the health of the PFI's portfolio can be attributed to the PFI

partnership with USAID FinGAP and its individual components, or institution-specific internal or

external factors

Requesting suggestions from the respondent where AGVCF should be further supported in

their institution and a sector level



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26 | P a g e

Main topics identified for interviews with BAS providers:

Engagement with financial institutions before and after on-boarding with FinGAP

Participating in USAID FinGAP Trainings with PFIs: How have these trainings changed

(contributed to change) the way the BAS provider facilitates agricultural investments between

FIs and SMiLEs



After on-boarding with USAID FinGAP, how strong do the BAS providers perceive the changes

in PFIs they supported in how they disbursed loans to MRS value chains

How USAID FinGAP has enabled the BAS providers to reach to new agribusinesses and other

clients

Requesting suggestions from the BAS provider where AGVCF should be further supported in

their institution and at sector level

Readiness of financial institutions and/ or SMiLEs to pay for the BAS provider's services

Suggestions on ensuring that linkages between FIs and BAS providers are sustained, even after

FinGAP

2.5 PRE-TESTING OF SURVEY TOOLS

The online versions of the interview questionnaires for PoCs and training participants were open for

pre-testing from February 23 to 27 to the COP of USAID FinGAP, the Communications Manager, the

Grants and Procurement Manager, the M&E Manager. The feedback was incorporated. After the first

interviews, minor amendments were made, and a couple of questions added.

2.6 DATA COLLECTION AND QUALITY OF AVAILABLE DATA

Data collection was done using desk and empirical research. The M&E Manager supported the

Consultant with all data requested and clarified any questions arising from reviewing them. Updated

M&E data are available for all performance indicators of USAID FinGAP. During the design of USAID

FinGAP, indicators were defined by USAID with target values set. The project has had one M&E

Manager since its inception. Since 2016, he receives part-time support by a Grants/ M&E Assistant and a

Procurement/ Operations Assistant.

The Consultant was also supported by all other individual members of the USAID FinGAP team,

including the COP/ DCOP/ FSSU/ Grants and AOD Units.

The meetings with the team members enabled the Consultant:

To receive updated PFI contact data, lists of training participants and the type/ title of generic

and institution-specific trainings they had attended. The training participants completed a training

evaluation form after each training. The aggregated feedback in electronic format is available

from 2014 to 2016. After that data were captured electronically and analyzed when there was a

request for it, for example from the trainer.



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27 | P a g e

To get an understanding of the P4P grants process and what is unique about the P4P grants, and

to review and aggregate data from PFI grant allocation spreadsheets from 19 PFIs from the time

they applied for the first time to USAID FinGAP. Grant allocation spreadsheets could not be

obtained for Agricultural Development Bank and IFS Financial Services Ltd. because they were

only recently on-boarded under the Window 2/ Limited Solicitation Grant and for Okomfo

Anokye Rural Bank Ltd. because it had not yet decided how to allocate the budget. As a Fixed

Amount Award, the grant's design is unique in that payment was made based on a PFI's

performance in achieving its disbursement milestones. Once the set milestone was achieved, the

grant was paid based on the assumption that the P4P grant was necessary for the PFI to achieve

the milestone. In compliance with USAID procedures, a PFI was not required to provide

receipts for the items purchased utilizing the grant. This means that there are no financial data

available for individual budget line items PFIs have used their grant for. In the interviews, the

Consultant focused on why the P4P grant was utilized and which items were perceived as most

important for PFIs to improve their ability to disburse AGVCF.

To get more information about the proposed BAS providers

To seek a first understanding why FinGAP was able to exceed its end-of-project targets already

in 2016; which external factors - outside the project's influence - might have played a role

USAID FinGAP documents reviewed include:

2017 Internal Mid-Term Performance Assessment

Summary Report, the Y4 Annual Progress Report (October 2016 - September 2017),

a 2015 Trip Report: Training Impact Assessment Design and Implementation and Case Study

Development,

Factsheets and the 2017 Investment Booklet "Agribusiness Investment Opportunities in

Northern Ghana",

an extract from the project contract documenting the objectives, technical requirements,

expected results, indicators and M&E of USAID FinGAP.

Empirical data collection was done using interviews and focus group discussions and an online-survey.

Interviews and focus group discussions with PFIs went on in two batches:

First batch, February 26 to March 14, targeting twelve PFIs in Upper West, Northern,

Upper East, Brong Ahafo and Ashanti regions with eighteen meetings with twelve PoCs (and/ or

alternate PoCs) and 32 training participants.

Second batch, March 16 to 28, targeting ten PFIs in Greater Accra and Central regions with

ten meetings with thirteen PoCs (and/ or alternate PoCs) and 29 training participants.

The gender composition in the interviews/ focus group meetings was 84% male and 16% female PoCs

(and/ or alternate PoCs), and 69% male and 31% female training participants.

USAID FinGAP’s FSSU Manager informed PoCs in advance with an official letter introducing the

Consultant's mission. USAID FinGAP arranged the Consultant's itinerary in two batches. The interviews



MAY 2018

28 | P a g e

were led by the Consultant and accompanied for the first batch of meetings by the Agri-finance Training

Technical Specialist. For the second batch of meetings, she was accompanied by the Grants Unit

Coordinator. Interviews had a varied duration (40 to 90 mins), depending on interview partners' time

availability and number of meeting participants.

Upon completion each interview was briefly discussed by the Consultant with the USAID FinGAP team

member who had attended the meeting to clarify issues that the Consultant had and to develop a shared

understanding about findings. The Consultant expects no bias in the responses of interviewed persons

for two reasons: (1) USAID FinGAP is ending and PFIs are aware of it, and (2) When introducing the

Consultant, the USAID FinGAP representative emphasized – with support from the Consultant – that

the assessment is looking for realistic feedback, perceptions and opinions of interviewees, with a view to

learn for future projects.

The link to the online-survey for training participants was directly emailed after meeting a PFI's PoC. The

email included also the list of training participants to which the link was requested to be sent. The

online-survey was opened February 28, after the first meetings with PFIs when follow-up emails

were sent, and it was closed April 5. After receiving the link, training participants were requested to

respond within five working days.

USAID FinGAP helped the Consultant follow-up on the online-survey from March 19 to 29: The

Grants/ M&E Assistant made phone calls to all PFIs which increased the number of online-survey

responses more than twofold to 63 training participants amounting to 11.5% of all unique training

participants. The direct response rate cannot be established because it is not clear to which extent PoCs

informed the list of training participants sent to them by email. The respondents' completion rate of the

online-survey was 87% and it took them on average 19 minutes to complete it.

BAS providers were interviewed from March 2 to April 10. The interviews lasted between 25 to 90

minutes.

2.7 DATA COLLATION, ANALYSIS AND REPORT DRAFTING

The Consultant was responsible for reviewing and collating data from the interviews and focus group

discussions and the online-survey for training participants. Notes taken during the interviews were

computerized using Survey Monkey and Excel.

The Consultant started to analyze data after the first batch of PFIs were visited. A presentation of first

findings after the first batch of PFIs were interviewed to the USAID FinGAP team was prepared for

March 19 and the presentation shared with the team for feedback. The feedback received was

incorporated. The works on the draft report started April 3. Analysis and report writing are done in

parallel. A first draft report was made available April 27. Feedback received from the FSSU manager, the

Agri-finance Training Technical Specialist and the Grants Unit Coordinator was incorporated, before the

second draft was shared with the entire team for feedback on May 14. Feedback from USAID and

recommendations will be incorporated into the Final Version.



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29 | P a g e

3 FINDINGS

3.1 CHANGES OF PFIS’ PRACTICES AND PERFORMANCES ALONG THE

RESULTS CHAIN

The SoW formulated that “through this assessment we seek to better understand the impact of these

grants and trainings on FI operations, beyond new financing out the door”.

Looking at the results chain below with anticipated short- and medium-term outcomes, this assessment

finds evidence for the effects of USAID FinGAP on improvements in PFIs’ practices and performances,

beyond new financing out the door.

Figure 8 presents evidence of changes in PFIs’ practices and performances after on-

boarding with USAID FinGAP: The two charts show respondents’ ratings from meetings with PoCs

and the online-survey as to whether USAID FinGAP had a strong, moderate, minimal or no effect on

their practices and performances. Both charts have bars dominated by dark green and light green-

colored segments, indicating where the respondents perceived a "strong effect" or "moderate effect" on

the outcome. The project’s purpose is increased investment in agriculture and PFIs confirm

the project’s strong effect on their increased agric. portfolios as the top outcome.

red dotted line shows areas of causal chain discussed in this section



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30 | P a g e

Figure 8: Rating of PFIs’ changes in disbursement of finance to maize, rice and soy value chains after on-boarding with USAID FinGAP

43

55

55

40

35

42

57

44

52

30

40

20

30

37

29

39

5

15

5

27

10

11

14

6

0

0

0

13

25

11

0

11

0% 20% 40% 60% 80% 100%

Improved turnaround time for appraisal of

loan applications and approval (n=21)

Improved monitoring

of borrowers (n=20)

Improved agribusiness customer

relationship management (n=20)

New product development targeted at

lending to agricultural value chains (n=15)


in agricultural lending (n=20)

Improved loan repayment in maize,

rice and soy value chains (n=19)

Increased size of

agricultural portfolio (n=21)

Improved health of

our agricultural portfolio (n=18)

% of meetings with PoCs

Q11: After on-boarding with USAID FinGAP: Please, indicate how strong you perceive

the changes in your institution's disbursement of finance to the maize, rice and soy

value chains? (from meetings with PoCs, n=22)

Strong effect Moderate effect Minimal effect No effect

48

61

69

34

37

31

70

24

50

39

30

49

56

65

26

70

2

0

2

11

7

4

4

6

0

0

0

6

0

0

0

0

0% 20% 40% 60% 80% 100%

Improved turnaround time for appraisal of

loan applications and approval (n=54)

Improved monitoring

of borrowers (n=54)

Improved agribusiness customer

relationship management (n=54)

New product development targeted at

lending to agricultural value chains (n=53)


in agricultural lending (n=54)

Improved loan repayment in maize,

rice and soy value chains (n=54)

Increased size of

agricultural portfolio (n=54)

Improved health of

our agricultural portfolio (n=54)

% of online-survey respondents


the changes in your disbursement of finance to the maize, rice and soy value chains?

(from online-survey, n=63)


Medium-

term

outcomes

(3-5 yrs)

Short-

term

outcomes

(1-2 yrs)



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31 | P a g e

The top three outcomes on which respondents perceived that USAID FinGAP had a "strong

effect" are the same for respondents from meetings with PoCs and the online-survey (cf. Figure 8):

(1) Increased size of agricultural portfolio: “Strong effect” confirmed by 57% of respondents

from meetings with PoCs and 70% of online-survey respondents (medium-term outcome).

(2) Improved agribusiness CRM: “Strong effect” confirmed by 55% of respondents from

meetings with PoCs and 69% of online-survey respondents (short-term outcome).

(3) Improved monitoring of borrowers “Strong effect” confirmed by 55% of respondents from

meetings with PoCs and 61% of online-survey respondents (short-term outcome).

The bottom three outcomes on which PFIs perceived that USAID FinGAP had a "strong effect"

are not entirely the same for both groups, and they differ in rank (cf. Figure 8):

Bottom three outcomes

- responses from meetings with PoCs

Bottom three outcomes

- online-survey respondents

(6) Improved loan repayment in

MRS value chains: "Strong effect"

confirmed by 42% (medium-term

outcome)

(7) New product development

targeted at lending to AGVC:

“Strong effect confirmed by 40% (short-

term outcome)

(8) Improved risk mitigation in

agriculture lending: “Strong effect”

confirmed by 35% (short-term to

medium-term outcome)

(6) New product development

targeted at lending to AGVC:

“Strong effect” confirmed by 34% (short-

term outcome)

(7) Improved loan repayment in

MRS value chains: “Strong effect”

confirmed by 31% (medium-term

outcome)

(8) Improved health of agricultural

portfolio: “Strong effect” confirmed by

24% (medium-term outcome)

When examining the bottom ranked outcomes, two aspects shall be highlighted:

1. The lower share of respondents rating the effect of the project on medium-term

outcomes (improved risk mitigation; improved loan repayment; improved health of agricultural

portfolio) as “strong” appears to be in-line with three to five year-horizon for medium-

term outcomes to accrue. The nine Window 1 PFIs would be those on-board long enough

(38 months) to see medium-term outcomes manifest. For the thirteen Window 2

PFIs, it is too early to see these medium-term outcomes. (This is also relevant for the

SoW question of impact of trainings and grants on the health of the agriculture portfolio;

Chapter 3.6.).

2. In the online-survey, responses from training participants from commercial banks were

underrepresented. Thus, the statements from the online-survey can be considered

more reflective of the situation of the savings and loans companies, rural and

community banks, the credit unions and microfinance institutions. For these



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32 | P a g e

respondents, the two medium-term outcomes "improved loan repayment in MRS

value chains" and "improved health of agricultural portfolio" ranked last.

Additional evidence for the short-term outcomes is discussed individually for trainings and P4P grants in

the next sections (Chapter 3.2 and 3.3). The medium-term outcomes are discussed jointly for trainings

and P4P grants in Chapter 3.5, after looking at some other features of USAID FinGAP (Chapter 3.4).

3.2 SOW QUESTION 1A: HOW HAVE PRACTICES AND PERFORMANCES

OF PFIS CHANGED AS A RESULT OF THE TRAINING PROGRAMS?

There is evidence that PFI trainings helped PFIs to increase technical capacities to disburse AGVCF and

PFIs put internal structures in place to institutionalize AGVCF (cf. Chapter 3.4) by building agric. teams

and building their staff’s technical capacities, setting up agric. desks or departments, tailoring existing or

new financial products for agric. lending, improving operational efficiency and reducing interest rates. But

PFIs do not have all parameters for institutionalization in place. In terms of trainings, PFIs were not

required to dedicate specific staff members for agric. lending and to designate them to attend the

institution-specific trainings. Training participants attended on average 1.5 trainings. A more systematic

training of dedicated staff (for example, six-month curriculum on AGVCF) as well as building up trainers

inside PFIs (Training of trainers in AGVCF) can reinforce PFIs’ technical capacities in AGVCF more

systematically.

Generic trainings for the PFIs started in 2014 in central locations (Accra and Tamale). USAID FinGAP

trained a total of 550 unique training participants from the 22 PFIs of the sample (cf. Figure 5): 124

training participants were either interviewed or participated in the online-survey (cf.

Chapter 2 for more details on the sample composition).




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Each PFI could send up to two staff members. It was attempted to interview those training participants

of a PFI who had attended most trainings. This could not always be achieved because they work in

different branches and because credit/ field/ relations officers spend most of their time in the field.

However, it is understood that the number of trainings a person attended is only an output indicator.

An individual’s absorption capacity is based on prior experience and the opportunity to apply the

training contents in the work setting. This influences the change of practices and performance in

disbursing AGVCF.

Institution-specific trainings started in 2016. They are offered on demand by the PFI from USAID

FinGAP at the PFI's premises or another preferred location. The institution-specific trainings are

specifically tailored to prior assessed training needs of a PFI’s staff. Institution-specific trainings had more

training participants from senior positions than generic trainings, including senior management staff. It

was reported by PFI staff and the USAID FinGAP team that this helped to secure a stronger buy-in at

the individual institutional level of each PFI.

Training duration is on average 2-days but can vary based on the demand. The longest institution-specific

training was 2 weeks, requested by Microfin Rural Bank, Central Region. The list of generic and

institution-specific training topics can be found in Annex 10. Institution-specific trainings focused on

AGVCF, financing agricultural machinery and equipment, and covered customer relationship

management, management information systems, environmental due diligence, gender and financial

inclusion, and financial products development. Respondents appreciated that trainings were highly

interactive. Training participants also mentioned that it gave them confidence to know they could always

call or email the FinGAP training specialist and trainers with questions.

In the sample, staff of all 22 PFIs had attended generic trainings. Seven PFIs have not yet had institution-

specific trainings.8 However, three of these (Barclays Bank, Ecobank and Stanbic) had utilized the

majority of their P4P grant for trainings for their staff. The trainings financed from the P4P grant are

covered in the grant section. Two PFIs9 just had their first institution-specific trainings at the time when

this assessment was done.

Short-term outcomes attributed by respondents to the USAID FinGAP trainings are based on

quantitative data and qualitative statements (summarized or quoted):10

8 Barclays Bank Ghana, Borimanga Rural Bank, CARD FNGO, Ecobank Ghana, IFS Financial Services, Stanbic Bank,

Success for People Microfinance

9 Kintampo Rural Bank, Okomfo Anokye Rural Bank: Effects of that first institution-specific training are not included

in this assessment.

10 For percentage ratings of PFIs on how strong they perceive the effect of USAID FinGAP on their changes in

disbursement of finance to maize, rice and soy value chains, cf. Figure 8.



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(1) Improved capacities of PFIs to disburse AGVCF: Figure 9 has two charts rating the

effects of trainings on improving the ability to disburse agriculture financing. The first chart shows

ratings given in meetings with PoCs. These are the meetings either held with PoCs separately, or the

meetings included (additional) training participants if a PFI’s PoC decided to involve them directly in

the meeting. The second chart shows the ratings given by training participants in the online-survey.

Looking at the results chain, this assessment finds evidence that USAID FinGAP generic and

institution-specific trainings improved the ability to disburse agriculture financing of

most respondents. The share of respondents stating that institution-specific trainings had a

“strong effect” on improving their ability to disburse agriculture financing (73% of

responses from meetings with PoCs; 80% of online-survey respondents) is higher compared to

the share of respondents which rate the effect of generic trainings (65% and 69%) as

"strong effect".

73

65

27

30

0

0

0

5

0% 20% 40% 60% 80% 100%

Effect of institution-specific trainings

on our ability to disburse agricultural

financing (n=15)

Effect of generic trainings on our

ability to disburse agricultural

financing (n=20)


Q21 If you or your colleagues attended trainings of USAID FinGAP:

How would you rate their effect on improving the ability to disburse

agricultural financing (from meetings with PoCs, n=22)


80

69

20

26

0

5

0

0

0% 20% 40% 60% 80% 100%

Effect of institution-specific trainings

on my ability to disburse agricultural

financing (n=46)

Effect of generic trainings on my

ability to disburse agricultural

financing (n=42)


Q5 How would you rate the effect of the generic and institution-specific trainings on

improving your ability to disburse agricultural financing (from online-survey, n=63)


Figure 9: Rating of training effect on an improved ability to

disburse agriculture financing



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Generic trainings: “Strong” effect on improved ability to disburse AGVCF rated by

60% of responses from meetings with PoCs and 69% from online-survey.

o Generic trainings were perceived as very important in terms of gaining knowledge and

learning from colleagues from other PFIs. Exchanging with other PFIs was positively

acknowledged by respondents in all meetings. “Information gathered from the

facilitators and participants from other institutions shed light on issues not previously

known to me which I now take in consideration when deciding on which loans to

disburse.” (Training participant from online-survey)

o BAS providers attended the PFIs generic trainings. It linked them up with the PFIs. Ten

PFIs collaborated later with BAS providers as a result of the contact facilitated by

USAID FinGAP. It enabled BAS providers understand the PFIs’ criteria for loan

applications and helped BAS providers prepare their customer SMiLEs accordingly when

they applied for a loan.

o Generic trainings were rated, for example, “moderately important”, when the training

contents were considered too generic to be readily applicable for the specific type of

institution (for example, as in the case of MFIs or FNGO). One interviewed PoC

compared the MFIs to anchovies and commercial banks to whales and says: “MFIs deal

directly with clients. The informal sector makes 60% of our clients. The commercial

banks are at the same table. FinGAP is feeding them with the same food. The approach

(to trainings and grants) has to be more tailored." (Nationwide Microfinance Ltd)

o Anecdotal evidence from an alternate PoC who had attended one generic training is an

example of how an individual’s absorption capacity enabled him using the USAID

FinGAP training materials to train colleagues or staff: The head of credit of Okomfo

Anokye Rural Bank has an agric. educational background. He was one of two training

participants from his bank to attend one generic training. The head of credit used the

training materials directly after a USAID FinGAP training to train his nine credit officers.

Institution-specific trainings: “Strong” effect on improved ability to disburse AGVCF rated

by 73% of responses from meetings with PoCs and 80% from online-survey.

o Institution-specific trainings were perceived as more beneficial, because they were

tailored to the individual PFI's needs. More staff members were able to attend, including

more credit/field officers and higher management level staff, because the training would

be held at the PFI's location or alternate premises. Respondents felt they could be open,

and ask specifically about problems without exposing confidential information to other

PFIs.

o Anecdotal evidence from Agriculture Development Bank shows that USAID FinGAP

training materials from institution-specific trainings were useful and were used to train

100 national service personnel as potential staff for agric. desks. ADB on-boarded with

FinGAP in 04/2017 under the Limited Solicitation Grant under Window 2. The alternate

PoC reported that ADB selected around 100 national service personnel who were agric.

biased: "We used USAID FinGAP training materials to provide an in-house training to all



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of them. And then selected the 38 national service personnel which now handle inquiries

at our agric. desks which we have established in banking halls in 38 branches."

(2) Improved turnaround time for appraisal and approval of loans: “Strong” effect after on-

boarding with USAID FinGAP rated by 43% of responses from meetings with PoCs and 48% from

online-survey.

Qualitative statements: "With the trainings, we do loan appraisal differently. The effect on our

speed is very strong. Approval is now within 48 hours. Loan officers appraise loan application

quicker, because of background checks already done by BAS providers." (Sinapi Aba Savings &

Loans) / "Agriculture is time-bound. We try to ensure that the customer gets the loan on time

by the seasonal calendar." (Kintampo Rural Bank) / "Trainings empowered our field officers:

They are more confident to do due diligence in the field. Before, I (general manager) had to do a

lot of legwork with them. The trainings helped to improve the recovery of loans, now, with almost

100% recovery." (Tumu Community Cooperative Credit Union) / “Both, generic and

institution-specific training have a strong effect. Capacity building is key: We are able to appraise

agric. loans. We are at a different level now. Fidelity Bank wants to be known as sector specialist.

Starting from frontline staff, RMs, who are the first point of contact, when it comes to the

customers (who apply for an agric. loan), we do it the first time and we want to do it right

throughout the entire chain. The trainings have enabled us to understand issues, we are able to

speak our customers' language. We are in a learning curve. We are still in a process.” (Fidelity

Bank) / “The training has increased our client base due to how readily loans are disbursed to the

client when they need it with proper appraisals.” (Training participant from online-survey)

/ The head of credit department who is also head of the agric. financing unit explains that the style

of appraising was different before: Now, we are targeting certain crops and improved upon

monitoring. Our recovery strategy was very effective after joining FinGAP (93% recovery rate of

agric. loans)” (Focus group participant) / “Before, we did not do proper due diligence. Through

the trainings, we came up with a strategy to assess agric. loans. Through the institution-specific

training, we learned how to recover loans and avoid default.” (Focus group participant)

(3) Improved disbursement of loans:

Qualitative statements: “Through the generic trainings, we know now what to tell people and

what to expect from them. Now, we have target customers. Disbursing to a value chain has

become a key practice. Initially, it was difficult.” (Borimanga Rural Bank) / “The (generic)

trainings opened my eyes to so many things: Initially, agric. loans were perceived as risky. Now,

even though they are risky, we lend. And we learned also when not to lend. FinGAP gave us

more insight, how to implement our agric. policy and roll it out. It is more tailored to what

FinGAP is looking at. It opened my eyes to how to structure a deal, to the opportunities in

agric. financing space, especially in MRS.” (IFS Financial Services) / “Institution-specific

trainings had a strong effect: Most of experiences we got, were based on the appraisal we did.

We involved security officers and management staff, from customer service to management

perspective. Before, we were doing agric. lending the way we did with other customers. Now,

we know the exact amount they need on point. Previously, we advanced all loans at once. Now,

we know we must do tranches at different levels. We aligned payment terms with the harvest.

We know the seasonal calendar now and in line with it we disburse.” (Microfin Rural Bank) /

“We do deals, we would not have done before, because we would have perceived them as too



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risky.” (Ecobank Ghana) / “We were not an agric. bank. Now we have empowered credit

staff. We restructured our agric. segment portfolio and started to treat agric. differently. Prior,

we used normal loan products. We restructured to meet the seasonality and repayment

conditions. Some loans still have a lot of challenges. We learn from challenges.” (First Allied

Savings and Loans) / “Before, I was looking agric. financing the conventional way. Now, I look

at the value chain and ask who the end user of the product is. We expect an increased profit

margin and more bankable business.” (ADB) / “I used to entertain fears in disbursing loans to

the agricultural sector because of the high risk involved but after the training by FinGAP we

were taken through how to do agricultural appraisals, disbursement, monitoring, and recoveries

since then I have disbursed to the agricultural sector with good recovery rate.” (Training

participant from online-survey) / “It has really impacted positively towards my way of

appraising loan clients in general. My agric. disbursement figures however dropped drastically

because of the need to correct by recovering all the loans that were disbursed prior to the last

FinGAP training.” (Training participant from online-survey) / “The training has helped in

timely delivery of loans and our ability to monitor our clients for loan repayment.” (Training

participants from online-survey)

(4) Improved monitoring of borrowers: “Strong” effect after on-boarding with USAID FinGAP

rated by 55% of responses from meetings with PoCs and 61% from online-survey. Third rank among

top three outcomes.

Qualitative statements: “The training had strong effect and came in very timely. It coincided with

what I was supposed to do. Gave me a refresher. We were having a monitoring problem. So, we

increased visits and calls from a monthly basis to a weekly basis. We call the client to know what

is happening. This also improved the relationship with our customers” (Okomfo Anokye

Rural Bank)/ “We (relationship managers) were visiting our customers, before. But the

institution-specific trainings were giving us more insights. Now we detect when loans are

expected to go bad: We have a watchlist, give demand notices and follow up on loans which are

not repaid on time. We do physical checks whether stock is a true reflection.” (ADB) /

"Trainings improved our monitoring. This had a great effect on increasing our overall portfolio,

especially in aggregation (to where most of the loans are granted, not so much to primary

producers" (Bonzali Rural Bank) / "We did not get a very good impact on loan recovery. I

hoped that performance of staff to monitor would improve more. There were internal

institution-specific factors (under investigation: dishonesty issue. Field officers keeping loan

amounts for themselves)." (Bessfa Rural Bank)

(5) Improved agribusiness customer relationship management: “Strong” effect after on-

boarding with USAID FinGAP rated by 55% of responses from meetings with PoCs; 69% from

online-survey. Second rank among top three outcomes.

Qualitative statements: Respondents perceive a strong improvement in agribusiness customer

relationship management (CRM): “Agric. lending is not that risky, especially in MRS. The

trainings have given us confidence to speak with customers.” (Lawra Area Rural Bank) /

Stanbic Bank PoC rated the effect of FinGAP as moderate explaining: “We included people in

credit and people who were not in credit. Assistants without agric. background. This has given

us a bulge in agric.” / Barclays Bank PoC says “Yes, we speak intelligently. My team speaks

more agriculture. We disburse USD 5 million to input dealers. The season starts in 03/04.2018.



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We tell input dealers from November you should start stocking. We give them a moratorium to

start paying back when they start to sell.” / “We identify opportunity clients and risks and

mitigate accordingly. We use radio, outreach and a lot of other activities. For FinGAP we got

new clients through referrals and existing clients.” (Microfin Rural Bank) / "We now have a

better understanding of our (potential) customers. We know what to tell them and what to

expect from them. We see a strong improvement in agribusiness CRM, because we bring in the

concept of agriculture value chains into maize, rice and soy. Before, we thought that after

harvesting it will be difficult to market the produce. Now, we know that there will be a market."

(Kintampo Rural Bank) / “As a mobile banker the training on customer relationship has

really helped improve how I interact with my customers and help them to understand the banks

products and services.” (Training participant from online-survey)

(6) New products developed targeted at lending to agriculture value chains: “Strong”

effect after on-boarding with USAID FinGAP rated by 40% of responses from meetings with PoCs;

34% from online-survey. Second rank among top three outcomes. This outcome is discussed

together with the effects of the grants (cf. Chapter 3.3).

Medium-term outcomes are discussed jointly for trainings and P4P grants in Chapter 3.6.

Suggestions for future design of trainings were received in meetings with PFIs and with staff from the

USAID FinGAP team. PFIs were asked to identify which follow-up support they would need (their

institution and their sector) in support of AGVCF. The responses are summarized in Annex 11. The

implications of findings for future design and delivery of trainings are elaborated in Chapter 4.

3.3 P4P GRANTS

The P4P grant was designed by the USAID FinGAP team as a pay-for-performance grant which is

triggered upon attainment of a milestone of AGVCF disbursed to SMiLEs in the MRS value chains of

USAID FinGAP.

According to M&E data, at the start of the assessment, the P4P grant amount triggered by 22 PFIs

was USD 2,477,858 under two windows:

Window 1 "Challenge Grant": USD 1,752,408 triggered by nine PFIs. FAA agreements

effective from 12/2014 to 04/2016.

Window 2 "Incentive Grant": USD 725,450 triggered by 22 PFIs. FAA agreements effective

from 12/2016 until the time of the assessment started 02/2018. Among these PFIs are nine PFIs

from Window 1 and two PFIs under the Limited Solicitation Grant.

"Limited Solicitation Grant" under Window 2: USD 112,500 triggered by Agriculture

Development Bank and IFS Financial Services. FAA agreement effective from 04/2017 to

02/2018.

USAID FinGAP team members responsible for the grants explained what is unique about the grant:

(1) The P4P Grant has a unique design as "modified" Fixed Amount Award (FAA):

This design was to make the grant (procedures) less cumbersome while being at the same time in

compliance with USAID procedures and creating incentives for PFIs to disburse.



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Different from a regular FAA which has an exact, fixed grant amount, the USAID FinGAP P4P grant has

only a total ceiling which is paid in tranches according to completed milestones. The grant amount is a

percentage of what PFIs have disbursed as loans (= modified FAA). There is an incentive for the PFI

grantee to work to complete the milestone. The more they have disbursed the more their draw-downs

will be. Tier 1 PFIs receive a grant amount with a 1 to 2% ceiling of what they have disbursed in

agriculture loans to MRS value chains. Tier 2 banks receive a grant amount up to 4%. A grantee PFI is

expected to contribute minimum 10% in cash and in-kind cost-sharing of the cost in the areas of labor,

equipment, trainings, and other direct costs towards the full execution of the grant.

Upon presentation of this evidence of attainment of milestone to USAID FinGAP, the grant is paid out:

The PFI grantee presents a certification to USAID FinGAP including an offer letter, co-investment report

and documentation that funds have been released to SMiLEs (with specific data on each qualifying

investment) as well as evidence for the PFI's cost-sharing. A grantee PFI is not required to present

receipts for the P4P grant utilization. Evidence is only required for the cost-sharing part.

At the time of application under an open Window, a financial institution indicates how it wants to use

the grant (under Window 2, this included also a spreadsheet with budget line items and costs financed

by the grant and cost-sharing from the PFI) and to obtain prior written approval for any changes from

USAID FinGAP to the activities being supported by the P4P grant, the fixed amount of the grant and/ or

co-investment, milestones or change in the FAA agreement completion date. A PFI grantee is not

expected to submit updated spreadsheets when such changes are made. This is the reason why Table 7

contains only aggregated information from PFIs’ individual spreadsheets on how the initial grant amount

was intended to be used under Window 2.

(2) Simplicity of the solicitation process:

The Request for Applications (RFA) and the required documentation was formulated in a way that it

would be easy to read and understand, without any jargon. PFIs needed to give line items what they

want to use the grant for. The team prompted them what information was required: During the

application, orientation for groups and one-on-one support was provided. The team went directly to

PFIs and helped them to understand the grant process, to break down what they really want, and clearly

outlined deliverables/ expectations.

(3) Constant follow-up during the implementation:

The team does constant follow-up through weekly phone calls and quarterly visits with the PFIs to ask

whether PFI grantees have made new disbursements, whether any support is needed.

PoCs were asked to indicate what they perceived as good about the grant and what could be improved.

Feedback from PFIs was very positive about the P4P grant in terms of its design as an incentive-based/

pay-for-performance-based grant and in terms of ease of the disbursement process. A PFI appreciated

that the team considered his request to have rather email/ whatsapp/ phone support instead of

meetings, because most of their work being in the field. One PFI's PoC said that phone calls were too

many. Four PFIs (among them two commercial banks, a rural bank and a microfinance institution)

considered the reporting requirements as too many and asked to reduce requests for repetitive

information.



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3.3.1 SOW QUESTION 5A: WHY HAVE PFIS UTILIZED GRANT PAYMENTS

TO PURCHASE THE GOODS AND SERVICES THAT THEY HAVE?

The underlying assumption is that the grant is necessary for a grantee PFI to achieve the

financing milestone: "For the benefit of doubt, incremental finance is herein defined as financing that

occurs as a result of USAID FinGAP’s grant award and should not include financing that would

otherwise be made in the absence of the grant. This grant is not intended to substitute for the

Recipient’s investments/lending that would otherwise be made in the absence of USAIDFinGAP’s

resources." (Source: USAID FinGAP FAA Agreement)

The assessment finds evidence for the proof of concept of the P4P grant: The key development

hypothesis in the SoW stating, “Smart incentives can motivate financial institutions to expand agricultural

financing,” can be confirmed by the leverage of AGVCF through the P4P grants, and the condition in the

grant agreement that the financing should not include financing that would otherwise be made in the

absence of the grant.

Leverage as a result of the P4P grant by type of PFIs

The entire sample of 22 PFIs has leveraged AGVCF of 44 to 1 (cf. Table 5): The USAID FinGAP grant

amount of USD 2,477,858 has leveraged disbursements to SMiLEs in MRS value chains of USD

108,563,478. The commercial banks have attained the highest leverage of 49 to 1. This is followed by

savings and loans companies and rural and community banks for which the leverage was 35 to 1. The

credit unions and the financial NGO have a leverage of 30 to 1 and the microfinance institutions have

the lowest leverage of 26 to 1.

Table 5: P4P grants leverage by type of PFI

Total

disbursement

(USD)

% of sample

PFIs

Total P4P

Grants

paid out

P4P Grant %

of Total

disbursement

P4P Grants

leveraged at

5 Commercial/

Universal Banks

85,212,748 78.5 1,731,758 2.0 49

3 Savings and Loans

Companies

3,408,018 3.1 129,000 3.8 35

2 Credit Unions 5,381,132 5.0 153,400 2.9 30

9 Rural and

Community Banks

7,505,877 6.9 249,700 3.3 35

1 Financial NGO 2,575,315 2.4 85,000 3.3 30

2 Microfinance

Institutions

4,480,388 4.1 129,000 2.9 26

% of all

FinGAP

P4P Grants

leveraged at

Sample of 22 PFIs 108,563,478 69.6 2,477,858 2.3 44

All USAID FinGAP 156,085,031 100




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Top five performers in terms of leverage as a result of the P4P grant

Table 6 shows the top five PFIs in terms of AGVCF leveraged as a result of the P4P grant. Four of them

are commercial banks, one is a rural bank.

The highest leverage of 186 to 1 was achieved by Fidelity Bank, meaning a grant award of 1

USD would result in 186 USD of AGVCF disbursed. In 2015, Fidelity took over ProCredit Bank

including its prior Agric. team, which together with FinGAP trainings coming in at the right time boosted

the bank's strategy: In the meeting with the PoC and two former ProCredit agric. staff, the PoC stated:

"Fidelity wants to be known as sector specialist. Starting from frontline staff, RMs, who are the first

point of contact, when it comes to the customer (who applies for an agric. loan), we do it the first time

and we want to do it right throughout the entire chain." Fidelity Bank has not yet utilized its grant it

received in December 2017. Fidelity Bank plans to use the grant to set up an entire Agric. Department

or Agric. Unit. Initially, Fidelity Bank had Agric. Centers and Relationship Manager (RMs) scattered in the

branches. After restructuring, they are merged in 8 smaller hubs (5 based in Accra, 1 in Tema, 2 in

Kumasi). That restructuring was not related to FinGAP, but part of the bank's overall strategy.

Table 6: Top five PFIs ranked in terms of P4P grants leverage

Total

disbursement

(USD)

% of sample

PFIs

Total P4P

Grants

paid out

P4P Grant %

of Total

disbursement

P4P Grants

leveraged at

Fidelity Bank 5,589,632 5.1 30,000 0.5 186

Agricultural

Development Bank

9,237,429 8.5 97,500 1.1 95

Ga Rural Bank 505,027 0.5 10,000 2.0 51

Stanbic Bank Ghana 1,285,712 1.2 25,526 2.0 50

Ecobank Ghana 12,235,912 11.3 273,180 2.2 45

% of all

FinGAP

P4P Grants

leveraged at

Top five PFIs 28,853,712 18.5 436,206 1.5 66.1

Sample of 22 PFIs 108,563,478 69.6 2,477,858 2.3 44

All USAID FinGAP 156,085,031 100.0


Ga Rural Bank is the only rural bank among these top five performers, with a leverage of 51

to 1. In the meeting with the PoC and four other staff, they mentioned “The grants were very

important. But they were not sufficient” (USD 10,000) and therefore scored the rating down to

"important". It used the grant to co-finance a vehicle for monitoring. "We do unannounced

visits. There is a better, intensified monitoring effort with the aid of the vehicle." But the effect on an

improved monitoring was rated as minimal, because the grant was not sufficient.



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Agriculture Development Bank ranks second with a leverage of 95 to 1, even though it only

joined under the Limited Solicitation Grant under Window 2 in April 2017. The PoC and alternate PoCs

and two staff members explained that "The grant came in as a boost. The availability of the grant

encouraged us to do more." At the time of the assessment, ADB had utilized USD 40,000 of its total

grant for: (1) dedicated vehicle the Agric. Finance Department which is responsible for managing all

agric. facilities within ADB: "We can do ad hoc visits, unplanned visits, unannounced visits. We can do

them at an increased frequency. And we expect an improved recovery of loans. We do not write

reports when we have not visited." The unspent amount is planned to be used for (2) trainings of in-

house staff and training of clients: "We plan a mixture of both, ADB staff involved in agric. financing

and farmer groups to train them in record keeping. The poultry farms are a very good marketing source

for maize and soy. The Newcastle disease affects poultry. We want to do a training program for these

poultry farmers. (3) New financial product development: To establish an agency in the catchment

area, ADB plans to do a feasibility study. "We had an agency 13 years ago. The new agency would not

have the full range of a banking office. If we are able to design value chain products (for example, in soya

a new outgrower scheme or for those not so close to a branch) in order to mitigate the (marketing)

risk." Of a total of 78 branches, ADB has 22 branches in the NDA zone.

Stanbic Bank Ghana ranks 4th with a leverage of 50 to 1 of disbursements as a result of the P4P

grant. The grant was rated as important by the PoC in improving their ability to disburse AGVCF. And

he elaborated: "We have not done many loans this year. We are thinking of tweaking our need. We

need a strong system. What we gained from the previous grant was not enough (USD 25,526; and

outstanding amout of USD 7,500 yet to be drawn down). We yet need to acquire a vehicle, because of

our general agric. portfolio. We concentrated on motivating our staff: We paid staff allowances

based on (a) volumes you do, (b) level of performance of loans."

Ecobank Ghana ranks 5th in terms of leverage at 45 to 1. Initially, it wanted to set up warehouses

with the grant. But then it utilized the entire grant money for training of its in-house staff,

while only seven of the staff participated in USAID FinGAP generic and institution-specific trainings, 21

staff were trained utilizing the P4P grant: "These trainings brought traction to our portfolio." Ecobank

increased its disbursement to MRS value chains 40 times compared to 2013/14 from USD 500,000 to

USD 20 million. "Before FinGAP, we did not have a single agric. expert in-house. Now we

have a team of 21. It cuts across departments and regions. At the frontline are the relationship

managers. They have the first information. We have a centralized credit process. Everybody brings it

from the regions to the center. We used our entire Grant (USD 273,180) for training of our in-

house staff and sent them to trainings abroad (for example, Missouri, San Francisco, NY, [etc.])."

The PoC explains: "I am an example: I am a trained psychologist and financial analyst. Now, I have a

touch base with reality giving me a stronger view." His colleague says: "I have a broader perspective on

how to do agric. value chain financing." The entire credit chain was involved in the trainings. The PoC

says: "This improved their performance. They are now open to applications which they would not

have done before. The appetite is there at Ecobank to look at more transactions. Synergies with

Ghana Grains Council (where Ecobank sits on the board) and Ghana Commodity Exchange: to ease

tradability of MRS to guarantee market off-take of value chain actors." Ecobank did a restructuring of its

product offering: "We worked on an agric. policy in 2016, and look at our agric. policy, annually. In our

2016 policy, we looked at rural banks and agric. production and asked ourselves: How can we be

relevant in financing agric. production? Before we would not lend to rural banks, and we looked



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43 | P a g e

differently at MFIs. Now, we on-lend to RCBs (for example, Builsa Community Bank, Bonzali

Rural Bank) and Sinapi Aba Savings and Loans."

Items for which P4P grants were utilized and perceived most useful

PoCs were asked to indicate for which items the P4P grant was utilized and which ones were perceived

as most useful to improve their capacity to disburse agricultural financing. A checklist was used based

upon which respondents could further elaborate how the P4P Grant changed or contributed to change

their practices and performances.

Intended P4P grants utilization

Table 7 uses Window 2 grant data aggregated by the Consultant for the purposes of this assessment as

a proxy for the entire grant amount under Window 1 and 2 in order to understand how the grant was

intended to be used and how much cost-sharing was planned by the PFIs. The initial grant amount under

Window 2 was USD 462,082 and cost-sharing was at USD 341,663, a ratio of 57% to 43%, indicating a

high share of cost-sharing from the PFI grantees in improving their capacities to disburse agriculture

financing. Data from the M&E system at the time of the assessment show a revised grant amount paid

out under Window 2 to 19 PFIs at USD 612,95011.

The top five budget line items for which P4P Grant allocation was initially planned:

(1), (5) Trainings of in-house staff involved in agribusiness (with no training topics

specified, rank 1) and training of in-house staff with specified training topics (rank 5). Ecobank

stands out as it already planned to allocate USD 100,000 of the initial grant amount to training of its

staff and used all of its grant for training to develop an agric. team of 21 bank staff. 17 PFIs allocated

grant money to trainings and nine of them provided cost-sharing for them.

(2) Vehicles and motorbikes for loan monitoring and credit supervision: Eight of the PFIs

allocated grant money to improve their field staff mobility to do monitoring. Related to this are

costs for fuel, maintenance and repair of the vehicles and motorbikes by ten PFIs, of which six

provided cost-sharing.

(3), (4) Pay for performance for staff: Staff allowances and bonuses/ incentives were

allocated grant money for overtime allowance and risk allowance or allowance to staff who accept

posts in rural areas, or as incentives to close deals, improve monitoring and control. Twelve of the

PFIs allocated grant money to bonuses/ incentives and no cost-sharing.

The top five budget line items for which cost-sharing from PFIs was initially planned:

(1) Salaries: Barclays Bank and Fidelity Bank stand out with their own contributions of more than

USD 100,000 each for salary for new six agric. team members in their Tamale office and

employment of agric. relationship managers within the grant period.

11 This revised amount paid out excludes the Limited Solicitation grants (USD 112,500) paid out to ADB and IFS

Financial Services, because the two PFIs had no spreadsheets to be included in Table 7.



MAY 2018

44 | P a g e

(2) Fuel, maintenance and repair of the vehicles and motorbikes are costs for which six

out of ten PFIs planned cost-sharing.

(3) Marketing, communication activities were an area where two out of three PFIs provided

cost-sharing.

(4) New financial product development: Two PFIs allocated their own contributions to this.

No grant money was allocated to it.

(5) Training of in-house staff (rank 5 for specified trainings, rank 7 for non-specified trainings)

are the areas in which nine of 17 PFIs planned cost-sharing.

Actual P4P grants utilization

In the interviews with PoCs and alternate PoCs of 22 PFIs, the top priorities for which P4P Grants

(Window 1 and 2) were utilized (cf. Figure 10) are similar to priorities identified the intended grant

allocation. Two of the PFIs have not yet utilized their P4P grant, yet: Okomfo Anokye Rural Bank

and Fidelity Bank.

PFIs' general statements about the grant show a different intensity of how needed the grant was as an

incentive to disburse to MRS value chains: PFIs respondents expressed that the P4P grants enabled them

to do things on their own and made them more agile (Barclays Bank). / "The grant is a catalyst,

coinciding with what we wanted to do." (IFS Financial Services). / "It came in as a booster."

(Agriculture Development Bank). / "The Grant cushioned our institution to buy assets for

monitoring. It helped to leverage some costs. Some things we would not have done." (Sinapi Aba

Savings and Loans) / "The grant came at the right time at the initial stage, when it was most critical to

have evidence to convince the bank's board." (Builsa Community Bank) / "Grants meet our

administration costs. Without them we would probably not be able to serve our clientele." (CARD

FNGO) / "The grant was useful. Agric. lending risk is very high. Banks are reluctant to go into. Grant

and training motivated us to go into agric. lending." (Microfin Rural Bank) / "The grant bridged the

gap: It was a motivation for us. With the grant, we were made to use our own money. And we could

see our perception that agric. lending is risky was not true." (Kintampo Rural Bank) / "The grant is

an incentive, just an incentive." (Nationwide Microfinance Ltd)

Four top priorities (cf. Figure 10) are visible by number of PFIs which had allocated grant money to

them, and which also perceived the utilization as most useful to improve their capacity in AGVCF:

(1) Monitoring equipment: 16 of the 20 PFIs have used the grant for motorbikes and vehicles for

loan monitoring and credit supervision and 15 of them considered this as most useful. In

combination with those PFIs which used it for fuel, maintenance or repair for their motorbikes and

vehicles, it shows the high usefulness of the P4P grant to equip PFI staff to improve loan monitoring

and credit supervision. Why did PFIs utilize the grant for this? PFIs were under-resourced (and

many still are, because they expressed they would need additional motorbikes and vehicles). The

PFIs acquired new monitoring equipment to replace obsolete and/or get additional ones. It enables

the PFIs to increase loan monitoring and credit supervision and, at regular intervals, increase their

geographical outreach to new districts/ more distant areas. A PFI was enabled to demonstrate

evidence to management and board that improved monitoring reduces loan default rate. It helps

PFIs in appraisal and community entry and sensitization of (potential) SMiLE clients (and training of

existing clients). Subsequently, PFIs perceive that their agribusiness customer relationship has



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45 | P a g e

improved. PFIs which saw already an improved loan recovery rate, gained an increased confidence

to give agric. loans based on AGVCF principles, when improved monitoring enabled them to

improve the loan recovery rate.

(2) Training: Eleven of the PFIs used the grant to provide in-house training to staff which five of

them rated also as most useful (for example, Ecobank used its entire grant for training, Barclays

Bank used most of its grant for training). Out of the seven PFIs which used the grant to train

SMiLEs, five found it most useful. (Kintampo Rural Bank used approx. 15% of its entire grant of

USD 11,700 to train in-house staff and 45% to train SMiLEs). Why did PFIs utilize the grant for

this? Trainings for in-house staff helped build up agric. teams and improve staff confidence,

motivation and ability to disburse AGVCF. Trainings for SMiLEs done strategically to develop

relationships and establish linkages among value chain actors for risk mitigation in order to improve

loan recovery rates, announced on local FM, attracted a large interest in participation and brought

new clients.

(3) Pay for performance of staff: Bonuses/ incentives, salaries and staff allowances: Nine

of the PFIs paid bonuses and incentives to their staff and seven of them rated this as most useful.

The pay-for-performance approach used by USAID FinGAP was adopted by some PFIs which had

not used performance-based payments before: Kintampo Rural Bank paid bonuses based on

recovery of loans disbursed and Builsa Community Bank set targets for credit officers. Others

used their already existing performance-based payment system (for example, Nationwide

Microfinance based on amount of loans disbursed and repayment rates; Stanbic Bank based on

loans disbursed and level of performance of loans). Why did PFIs utilize the grant for this? It is

confirmed from the interviews that the bonuses/ incentives improved the motivation and

performance of staff. In combination with staff allowances for monitoring staff as well as salaries for

new staff, payment for performance plays a highly useful role to financially compensate staff for

improved performance of their work (including risky work for credit officers going to remote

areas).

(4) IT and communication hardware: Nine of the PFIs bought IT and communication hardware

(i.e., desktop computers, laptops, printers), and five of them ranked this as most useful. Why did

PFIs utilize the grant for this? The equipment enabled staff to better perform their work, also

from out-of-office locations and to automate operations.

The grant was also used for new financial product development and other items:

For example, agric. desks, SUSU products, special agric. loans, farming and transport equipment

for PFIs’ customers to use at a fee, reduced interest rates for lending to MRS value chains. For

more details, cf. Chapter 3.3.2). Why did PFIs utilize the grant for this? The training on

product development enabled PFIs to take a second look at existing products and roll out

innovative and customized products and services, tailored to customers’ needs based on market

research and six-month piloting or the review/ revision of product features (for example,

extension of a moratorium, enabling disbursement in tranches, cashless disbursement). It also

enabled some of them to prevent a roll out of a product which proved dysfunctional during the

pilot testing. PFIs were enabled to address operational procedures and reduce operational costs

and reduce interest rates, which enabled them to engage new clients, too.


ASSESSMENT OF INCENTIVE GRANTS AND TRAINING PROGRAMS IMPACT ON INVESTMENT FACILITATION,

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46 | P a g e

Table 7. Intended P4P grant allocation (Proxy): Planned budget line items under Window 2 by 19 PFIs*

Budget line items Nu

mb

er

of

PF

Is

fin

an

cin

g 1

00%

fro

m P

4P

Gra

nt

Nu

mb

er

of

PF

Is

wit

h c

ost

-

shari

ng

Am

ou

nt

(US

D)

fin

an

ced

fro

m

P4P

gra

nt

Ran

k b

y P

4P

Gra

nt

am

ou

nt

Am

ou

nt

(US

D)

of

co

st-s

hari

ng

by P

FI

Ran

k b

y c

ost

-

shari

ng

To

tal co

sts

(US

D)

Ran

k b

y t

ota

l

co

sts

Sh

are

(%

)

fin

an

ced

fro

m

P4P

Gra

nt

Co

st-s

hari

ng

(%)

by P

FI

Salaries 1 4 1,400 13 257,012 1 258,412 1 1 99

Bonuses, incentives 11 0 53,700 4 0 15 53,700 6 100 0

Staff allowances 7 1 54,550 3 400 14 54,950 5 99 1

Furnishing of agric. desks 3 1 2,058 12 3,000 8 5,058 14 41 59

IT and communication hardware 6 3 8,771 11 649 13 9,420 12 93 7

Software 0 0 0 14 0 15 0 16 0 0

Vehicles/ motorbikes 6 2 125,909 2 4,500 6 130,409 3 97 3

Fuel, maintenance and repair of vehicles/

motorbikes

4 6 14,000 7 49,304 2 63,304 4 22 78

Training of in-house staff with training

topics specified

6 5 23,194 5 4,675 5 27,869 7 83 17

Training for in-house staff involved with

agribusinesses (no topic specified)

2 4 131,500 1 4,248 7 135,748 2 97 3

Training of clients, including SMiLEs 3 2 12,000 8 1,000 10 13,000 9 92 8

Marketing, communication activities 1 2 15,000 6 7,400 3 22,400 8 67 33

Loan appraisal and administration costs 1 1 0 0 1,515 9 1,515 15 0 100

Insurance and risk mitigation processes 2 1 10,000 9 960 12 10,960 11 91 9

New financial product development 0 2 0 14 6,000 4 6,000 13 0 100

Other 1 1 10,000 9 1,000 10 11,000 10 91 9

Total 462,082 341,663 803,745 57 43

Source: USAID FinGAP M&E system: Budget spreadsheets of 19 PFIs. Own aggregation of data according to budget line items.

(*) Breakdown of costs by budget items is available for Window 2 Grant, initial grant amount, for 19 PFIs. The P4P Grant is a Fixed Amount Award which does not require from the grantee PFIs to

submit receipts on what they actually utilized the grant for. Receipts are only necessary for the PFIs' cost-sharing. There were no budget tables from three PFIs: ADB and IFS Financial Services joined

later under the Limited Solicitation Grant under Window 2; and Okomfo Anokye Rural Bank had not yet decided on how to utilize the grant, at the time of the assessment.



MAY 2018

47 | P a g e

Figure 10: P4P grant utilization and perceived usefulness

3

1

0

0

1

5

5

6

15

0

5

0

3

7

4

7

5

1

1

2

7

11

7

16

1

9

2

4

9

5

0 5 10 15 20

Other

New financial product development

Insurance and risk mitigation processes

Loan appraisal and administration costs

Marketing, communication activities

Training of clients, including SMiLEs

Training of in-house staff

Fuel, maintenance and repair of vehicles/ motorbikes

for loan monitoring and credit supervision

Vehicles/ motorbikes for loan monitoring

and credit supervision

Software (for example, banking software)

IT and communication hardware (for example,

computers, printers, mobile phones, digital cameras)

Furnishing of agri-desks

Staff allowances

Bonuses, incentives

Salaries

Number of PFIs

Q15 For which items was the Incentive Grant utilized?

Which of these items - you perceive - were most useful? (from meetings with PoCs, n=22)

Items for which the Incentive Grant was used of which were most useful



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3.3.2 SOW QUESTION 1B: HOW HAVE PRACTICES AND PERFORMANCES

OF PFIS CHANGED AS A RESULT OF P4P GRANTS RECEIVED?

This section discusses evidence of short-term outcomes specifically attributed by respondents to the

P4P grants. Medium-term outcomes are discussed jointly for trainings and P4P grants in Chapter 3.6. For

percentage ratings of PFIs on how strong they perceive the effect of USAID FinGAP on their changes in

disbursement of finance to maize, rice and soy value chains, confer Figure 8.

There is evidence that P4P grants helped PFIs to increase technical capacities to disburse AGVCF and

PFIs put internal structures in place to institutionalize AGVCF (cf. Chapter 3.4) by building agric. teams

and building their staff’s technical capacities, setting up agric. desks or departments, tailoring existing or

new financial products for agric. lending, improving operational efficiency and reducing interest rates. But

PFIs do not have all parameters for institutionalization in place.

(1) Improved capacities of PFIs to disburse AGVCF: 100% of PoCs confirmed the

importance of the grant for improving the respondents’ ability to disburse agriculture loans,

including MRS value chains. It was "very important" to 78% of respondents and "important" to 22%

of respondents of those PFIs which had already utilized the grant (cf. Figure 12)

(2) Improved turnaround time for loan appraisal and approval: “Strong” effect after on-

boarding with USAID FinGAP rated by 43% of responses from meetings with PoCs and 48% from

online-survey.

Qualitative statements: Bessfa Rural Bank' PoC states that the grant had a strong effect on an

improved turnaround time: “The grants were an incentive to increase the turnaround time. We

achieved a 5 to 10% reduction in turnaround time, because we cut off some of our procedures

and more them more efficient." / Success for People Microfinance PoC says: "I see an




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49 | P a g e

improved performance of staff. The training of the credit team and managing director in

agribusiness financing with tailor-made focus on MRS value chains helped us to know the story

behind the financial figures when we receive loan applications." / Barclays Bank reports that

USAID FinGAP had a strong effect on improving the turnaround time by100%. This is seen as a

result of the training for front-end and back-end staff (covered by the grant), some of which

were sent to South-Africa for training and to Purdue University. "For AGVCF you need three

things: finance, credits and agriculture. We had two of them (finance and credit). FinGAP

provided the 3rd bit (agric). The grant helped us to bring our staff up to speed. I started alone,

now I have an agric. team of five people. We also got a specific grant from FinGAP to train 150

colleagues." / Ecobank which utilized the entire grant for training of its in-house staff sees a

strong effect on changing the perception that agricultural lending is risky. The entire credit chain

was involved in the trainings which the PoC confirms has improved their performance: "Staff are

now open to applications which they would not have done before."

(3) Improved disbursement of loans:

Qualitative statements: The grant gave staff more confidence to grant loans to the agriculture

sector and to concentrate more on disbursing to AGVC: Asked, why the grant was an incentive,

Borimanga Rural Bank alternate PoC mentioned "Our agric. loan portfolio was going down.

The grant had an effect on our confidence to give loans to the agric. sector. Bonuses and staff

allowances were a motivation to disburse quality loans, leading to an improved performance of

staff." / IFS Financial Services DGM says "I asked my staff every morning, at week meetings

and sales meetings: 'Are we disbursing', in order to meet the milestones. The focus is there. And

we learned also not to give loans." / Ga Rural Bank had a financial constraint to disburse loans

to MRS value chains because of its deposit-credit ratio. It used the grant for product

development to mobilize deposits through e-SUSU. Mobile bankers go around to get deposits:

"We would have done it without FinGAP. But it would have taken us longer time. We stopped

the traditional SUSU program, stopped the manual way of doing mobilization of deposits. We

took it to the next level to employ technology to mobilize money." (cf. also new product

development)

o Improved loan disbursement was constrained by availability of competitive

funding. Ten out of 22 PFIs expressed the need to access to competitive AGVCF to

lend to their customers. They reported constraints either because of too high demand

from their customers or too high interest rates of funds for on-lending. In view of the

entire agriculture sector and commercial loans: Barclays PoC stated: "Finance to the

agriculture sector is needed. Agriculture competes with other sectors for commercial

loans. We need cheaper sources of finances from Development Partners and Central

Government. We need access to competitive AGVCF below 10% with longer tenure."

(Barclays has introduced long-term loans in agric. of 10 years). None of the other

commercial banks mentioned this as an issue. (Ecobank does on-lending to RCBs and

MFIs. Fidelity Bank considers on-lending to RCBs or MFIs as difficult to monitor. While

the sampling might show good results, the overall result might not be good.)

o PFIs were asked to give viable interest rates for them to access to AGVCF, once

they mentioned that access is an issue for them to increase their lending to MRS value

chain actors:



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Up to 5% p.a: Ga Rural Bank

6 to 10% p.a: Success for People Microfinance, Nalerigu Community

Cooperative Credit Union, Bonzali Rural Bank, Kintampo Rural Bank, Builsa

Community Bank, Barclays Bank referring to commercial loans¸

11 to 15% p.a: First Allied Savings and Loans, Microfin Rural Bank

16 to 18% p.a: IFS Financial Services (to be able to onlend at 24-25%)

o Some statements of challenges are quoted below: IFS Financial Services DGM

“Through the agric. Desk there is a moderate improvement, because we were

constrained by our current source of funding. We need much cheaper rate of access to

funding, at least even at 18% p.a, then we can still on-lend to farmers at 24-25%p.a.

Currently, we do it at 36% p.a, which is too high for agric. Financing.” / “The source of

our funds are from customers. Currently, we pay 21% p.a. We would need access to

funds (at 10 to 12% p.a.) to on-lend to our agric. Value chain customers. We cannot

meet the demand of our customers. The demand has increased through the partnership

with FinGAP. We had a loan request from a rice mill who works with a large base of

FBOs (farmer-based organizations). We could only provide the company with 1/3 of the

requested loan.” (First Allied Savings and Loans) / “The mobilization of savings is a

challenge. We cannot meet everybody’s demand. Before, we took a facility from a

Dutch Bank (EUR 50,000, 10% p.a. in 2014, will finish payback in 2019). If FinGAP could

create an opportunity to access competitive agriculture value chain finance this would

help increase our lending to the agric. value chains. We have quality clients to lend to.

But we are limited with liquidity. We need deposits and access to competitive funds.”

(Nalerigu Community Cooperative Credit Union)

o Through the grant, four PFIs have reduced interest rates for lending to MRS

value chains: Builsa Community Bank, Kintampo Rural Bank and Success for People

Microfinance lowered their interest rates by 4% p.a to 2% p.a. The grant helped them to

address operational costs to be able to reduce interest rates to lend to MRS value

chains and helped them to engage new clients (increase their clientele base): "Because of

our location, the deposit has always been a challenge. We need access to cheaper

finance for on-lending. The grant has enabled us to reduce our interest rate by 4% to

27% p.a." (Builsa Community Bank) / "We used the grant to address operational

costs, and thus could reduce our interest rate by 2%. The idea was presented to us by

FinGAP. And we implemented it successfully: It helped us to get new customers".

(Kintampo Rural Bank) / "Most useful was the lowering of the interest rate by about

2%. FinGAP gave us the idea and we bought into it. Because of the lowered interest

rate, we have high demand of customers and an improved repayment rate. We cannot

meet the high demand from customers. We had been looking into the costs of funds

and we used the grant to cushion the costs of funds. This was possible because of

improved capacities of our staff in the credit appraisal process." (Success for People)

/ "A lot of effort goes into achieving the milestones, the 2% Incentive Grant could have

been sometimes higher (5%). We had to reduce our interest rate to get the

disbursement." (Tumu Cooperative Credit Union)



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(4) Improved monitoring of borrowers: “Strong” effect after on-boarding with USAID FinGAP

rated by 55% of responses from meetings with PoCs and 61% from online-survey. Third rank among

top three outcomes.

Qualitative statements: Adequate monitoring logistics and training and staff bonuses/ incentives

play a vital role to increase a PFI’s confidence to continue to disburse AGVCF when an

improved monitoring contributes to improved loan repayment rates in MRS value chains. PFIs

need evidence for the proof of the AGVCF concept in terms of improved loan repayment rates.

The evidence of improved loan repayment helps to secure management buy-in. The statements

by Kintampo Rural Bank and Barclays Bank are representative for the PFIs which utilized

the grant for monitoring equipment. The improved monitoring is an outcome of both trainings

and grant combined: "The effect of USAID FinGAP on improving our monitoring is very strong.

We perceived agric. lending as risky. Through the training and monitoring gadgets (for example,

protective clothes against rain), we are better equipped to do the monitoring. Now we also

follow a more efficient way of how we organize the monitoring, because we monitor groups (5

to 10 individuals) at the same time. With the subsidy for operational costs for monitoring and

the gadgets, we can do an improved monitoring, which has led to an improved loan repayment.

And we applied what we learned to other crops. So, our total portfolio has increased and

improved in health." (Kintampo Rural Bank) / "The training opened our eyes that we have to

monitor our customers more closely. The grant helped us to get the tools." (Barclays Bank) /

IFS Financial Services, which joined the project in 04/2017, anticipates that there will be an

effect on improved monitoring, but it is too early to measure because the vehicle was only

brought in 02/2018 to the Northern sector. / ADB, which also joined in 04/2017, already

perceives the moderate effect on an improved monitoring because of the dedicated vehicle. It

enables the agric. financing department staff to do ad hoc visits, unplanned and unannounced

visits at an increased frequency. The PoC expects an improved recovery of loans as a result.

Monitoring is also done differently because of USAID FinGAP trainings in terms of timeframe

and timelines for feedback given to staff. / "We learned our lesson from a delinquent loan and

our logistics for monitoring (motorbikes) from the FinGAP grant came in at the right time.

Now, we are very strict with the appraisal." (First Allied Savings and Loans) / "Fuel and

motorbikes enabled to increase the sequence of visits to customers which are on average an

hour away. Customers need constant visits. The improved monitoring helped in increasing the

loan recovery. It had an effect on increasing our confidence to disburse loans. Agric. lending is

risky, and it needs to be ensured that the customer has used the loan for the purpose

indicated." (Borimanga Rural Bank) / "We utilized the motorbikes (purchased from the

grant) to demonstrate that improved monitoring reduces the default rate. The results start

coming. Now, I have the number as evidence." (Builsa Community Bank)

(5) Improved agribusiness customer relationship management: “Strong” effect after on-

boarding with USAID FinGAP rated by 55% of responses from meetings with PoCs; 69% from

online-survey. Second rank among top three outcomes.

Qualitative statements: Kintampo Rural Bank strategically combined the use of its grant for

an agric. desk and trainings for SMiLEs and used its regular PR on the local FM station to

promote the agric. desk and the trainings for SMiLEs to link up agric. value chain actors during

these trainings. This created a huge interest among the audience to attend these trainings,

because companies saw the benefit of getting connected to other value chain actors. / "We set



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up an agric. desk to have more focus on agribusinesses. It tremendously increased our interface

to see to needs of customers." (Builsa Community Bank) / "Once the FinGAP grant helped

us to get the logistics for monitoring, we have improved our monitoring. We visit our

customers more regularly (once every 3 months or monthly). This was possible through the

grant and it has had a strong effect on the improvement of our customer relationship

management." (Sinapi Aba Savings and Loans)

(6) New financial products developed targeted at lending to agriculture value chains:

“Strong” effect after on-boarding with USAID FinGAP rated by 40% of responses from meetings

with PoCs; 34% from online-survey. Second rank among top three outcomes.

The development of new financial products can be seen as a result of PFIs' improved capacities

to disburse AGVCF which is in part a result of USAID FinGAP trainings in product development

and the P4P grant. From the qualitative statements it appears that USAID FinGAP trainings and

the trainings financed by PFIs utilizing the grant were necessary, but not sufficient by themselves

to enable PFIs to develop the new products:

o Three PFIs set up agric. desks or agric. units, a fourth PFI plans to set up one:

Barclays Bank, Builsa Community Bank, Kintampo Rural Bank set up an agric.

unit or agric. desk. Fidelity Bank yet keeps the grant to set up an agric. unit: "The

discussion about the agric. unit has been before FinGAP and it has gotten now with

FinGAP to a stage where we know how beneficial it would be." Fidelity Bank already

established agric. centers in Accra and eight smaller hubs which would have been set up

with or without the grant. The restructuring into the hub-system was a decision not

made because of USAID FinGAP. But FinGAP training in customer relationship

management (relevant for training effects) helped staff at these agric. centers there to

better understand and serve the customers.

o Two PFIs developed SUSU products to mobilize deposits: Lawra Area Rural

Bank after the training developed a new SUSU product for groups to enable them to

raise capital for loan repayment. The results of testing it with two comparator groups

(group of females only, group of females and males) led the bank to put the product on

hold: "Repayment by the female group was 100%. In the mixed group, females would pay

at first, but males did not. The poor repayment attitude of males negatively affected the

females in that group. Now the bank has put it on hold". Now, the bank considers

developing another product – cashless disbursement directly to input suppliers instead

of cash disbursement to primary producers. / Ga Rural Bank had a financial constraint

to disburse loans to MRS value chains because of its deposit-credit ratio. It used the

grant for product development to mobilize deposits through e-SUSU. Mobile bankers go

around to get deposits: "We would have done it without FinGAP. But it would have

taken us longer time. We stopped the traditional SUSU program, stopped the manual

way of doing mobilization of deposits. We took it to the next level to employ

technology to mobilize money."

o Special agric. loans: Tumu Community Cooperative Credit Union developed

its first financial products to meet specific needs of its members in the MRS value chains

since its establishment in 1961. One of the three products is a special farming loan with

a reduced interest rate which requires the borrower to save four times within a certain



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period to become eligible for this loan. "With USAID FinGAP training and the fact that

we wanted to go into agriculture, we developed our first products." / Microfin Rural

Bank stated that the effect on new product development was moderate. The bank

drafted a loan policy for cocoa farmers and piloted it. The team stayed for more than

one week in the pilot location to get feedback from test participants. / Builsa

Community Bank launched a loan product for women-led agribusinesses after a

survey showed the bank had a large base of female customers (40%). "The plan came up

to help them to get their own field and clear it. A few of them were also groomed into

marketers, some by the bank, by BAS providers and some came by their own. Also new

females joined the groups. FinGAP had contributed a lot and has given us a passion for

women-led agribusiness. FinGAP gave the idea to concentrate to get in more businesses

for women. Their potential was underutilized. Most women were underemployed and

had only four months/ year paid employment." / Bonzali Rural Bank started to

develop an equipment leasing product based on a market survey as a result of the

training/ First Allied Savings and Loans developed three financial products, including an

input finance scheme which was piloted in two of its branches; cashless transactions to a

rice farmers’ association.

3.3.3 SOW QUESTION 5B: WHAT LESSONS CAN BE LEARNED FOR OTHER

FIS LOOKING TO EXPAND THEIR ENGAGEMENT IN AGRICULTURE?

Six lessons were learned:

(1) Evidence from improved monitoring can increase a PFI’s confidence to continue

disbursing AGVCF when the improved monitoring contributes to improved loan

repayment rates in MRS value chains. Improved loan repayment is a medium-term outcome

which takes three to five years into a project to manifest. A consistent allocation of adequate

monitoring logistics and monitoring training and staff bonuses/ incentives for improved monitoring

over a timeframe of three to five years is a useful blend of inputs as can be seen from the feedback

of the sample PFIs. Even if it is still early for thirteen PFIs which joined only under Window 2 to see

medium-term outcomes, the usefulness and further need of this support has been confirmed.

(2) Using P4P grants to set up agric. desks for targeted customer support appears to be

successful when sufficiently staffed with a dedicated team that is well trained and

equipped. Implementation of a communication strategy about the PFI‘s agric. desk and its agric.

lending products at local FM stations and customer touch points are effective means to raise interest

among (potential) customers. For a better institutionalization, the setup of an agric. desk is framed

by an agric. lending policy and has buy-in from senior management. In the sample, there were PFIs

like Builsa Community Bank, Sinapi Aba Savings and Loans, Ecobank, Barclays Bank and Fidelity Bank

where the project coincided with the institutions’ works on their agric.-related strategy, and the

project came right on time.

(3) Streamlining operational policies and procedures to effectively and efficiently

minimize operational costs enabled four PFIs to reduce interest rates to lend to MRS

value chains. This helped them to engage new clients (increase their clientele base). It improved

their disbursement of loans.



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(4) Most useful utilization of grants appears to have been a blending of performance-

based payment and in-house training of staff. In the sample, PFIs were inspired by the USAID

FinGAP model for grants or used their own system to define performance criteria to offer

performance-based payment of bonuses/incentives to staff.

(5) Using grants to sensitize and reach out to existing and potential customer SMiLEs

appears to be particularly effective in attracting new customers, when trainings are also

used to strategically link up value chain actors, and local FM stations are used to communicate about

the benefit of the trainings.

(6) In financial product development, conducting a proper market research and pilot-

testing the product prior to roll out can prevent from launching failure products. Sample

PFIs have benefitted using a systematic approach which enables them to incorporate feedback from

potential customers and correct any failures during the trial phase.

Suggestions for improving the grant were discussed in meetings with PFIs and with staff from the USAID

FinGAP team. The implications of findings for future design and delivery of P4P grants are

elaborated in Chapter 4.

3.4 SOW QUESTION 2: HOW HAVE TRAININGS AND P4P GRANTS

ENABLED GREATER INSTITUTIONAL FOCUS ON AGRICULTURE AS A

VIABLE BUSINESS LINE?

This chapter assesses evidence that PFIs are institutionalizing agriculture as a business line.

Institutionalization was measured by:

(1) PFIs’ levels of confidence that AGVCF is a viable way for them to go, beyond USAID FinGAP

support;

(2) whether PFIs have an agric. unit/ desk with dedicated staff and financial resources;

(3) whether PFIs have an agric. lending policy;

(4) whether PFIs have special agric. loan products;

(5) whether PFIs have sufficient access to AGVCF for on-lending



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There is evidence of institutionalization along these parameters among the sample PFIs. But PFIs do not

have all parameters in place in their internal structures. This can be a challenge for sustainability. The

lack of AGVCF is a critical issue for a greater institutional focus on agribusiness as a viable business line.

If agriculture will be a viable business line using the AGVCF concept promoted by USAID FinGAP should

again be assessed two years after closure of the project.

(1) PFIs’ level of confidence that AGVCF is a viable way for them to go, beyond USAID

FinGAP support: Chapter 3.1 presented evidence that PFI trainings and P4P grants improved PFIs’

capacities to disburse AGVCF. The improved capacities to disburse AGVCF have resulted in an

improved confidence of PFIs that AGVCF is a viable business line. Figure 11 shows promising feedback

54%

31%

13%

2%0%

Q10: In your opinion, is agriculture value chain financing

the way to go, even without further USAID FinGAP support?


Very confident (n=29)

Confident (n=17)

Not so confident (n=7)

Not at all confident (n=1)

Do not know (n=0)52%43%

0%0%

5%

Q28: In your opinion, is agriculture value chain financing

the way to go, even without further USAID FinGAP support?

(from meetings with PoCs, n=22)

Very confident (n=11)

Confident (n=9)

Not so confident (n=0)

Not at all confident (n=0)

Do not know (n=1)


Figure 11: Level of confidence that AGVCF is a viable way to go, even

without USAID FinGAP



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from respondents: More than 50% are “very confident” that AGVCF is a viable way to go, even without

USAID FinGAP support. Among the online-survey participants are 13% who are “not so confident”.

For example, there is evidence that improved monitoring because of improved monitoring

capacities (through trainings and grants for monitoring logistics) contributes to an improvement

in loan repayment in MRS value chain portfolios: "Previously, our loan default rate was at 4.1 to

4.2%. Improved monitoring has helped focusing on the right things at the right time. Droughts

and armyworm had effects on loan repayment. During the 2017 drought, we had a default rate

of 5.8%. Our loan default rate would have been higher without FinGAP's support.” (Nalerigu

Community Cooperative Credit Union)

Negative experience with loan repayment makes PFIs more reluctant: “Our first entry was a

GHC 700,000 loan for primary production. The highest amount, we ever gave. The PFI has

taken legal action against the loan delinquent. After this case happened, we still need to do a lot

of convincing to our management. For primary production loans, we do not dare mentioning

them to our board.” (First Allied Savings and Loans)

Positive evidence of improved loan repayment improves PFIs’ confidence that AGVCF is a viable

way to continue: Here is an example, where improved capacities to appraise and approve loans

are linked by the respondent to the increased size and health of the PFI’s agriculture portfolio:

"When loan applications for other crops came, we applied what we learned. So, our total

agriculture portfolio has increased and improved in health." (Kintampo Rural Bank)

There are thirteen PFIs which on-boarded under Window 2: Four of the PoCs directly made

statements that it is still early/ too early to see an improved loan repayment in MRS value chain

portfolios. Two of them joined under the Limited Solicitation Grant under Window 2, approx.

ten months ago: IFS Financial Services, Agriculture Development Bank.

o (1) IFS Financial Services: “We have not finished the loan cycle, yet.”

o (2) Agriculture Development Bank: “If you look at the trend: The MRS portfolios

have increased. It is implied that it will further increase. It is expected that improved

monitoring will influence the quality of the MRS value chain and agric. portfolios in the

future. It is at the point of appraisal. Whether the knowledge we acquired will have an

impact on the quality of the portfolio in the future is too early to say.”

o (3) Okomfo Anokye Rural Bank confirmed it cannot yet say whether loan

repayment rates have improved.

o (4) Fidelity Bank Ghana PoC mentioned: “For overall agric. portfolio: We have no

overview on this. It is not our sphere of influence. MRS is only a small part of the overall

agric. portfolio. For MRS value chain portfolios: There is an increase in size. But it is too

early to say something about an improved loan repayment in MRS value chains. FinGAP

had no effect on the loan repayment, yet. And there were internal and external factors:

Prior to ProCredit joining Fidelity Bank, ProCredit had a big poultry sector, most loans

had difficulties, because of the 2015 bird flu. It was also part of our learning strategy to

learn from disbursing more loans to output processors (USD 5,490,000) than to traders

(USD 16,678) or input dealers (USD 86,954) and to get to understand what is going

on.”



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(2) Whether PFIs set up an agric. unit or agric. desk with dedicated staff and adequate

financial resources allocated to it: In the sample, there are three PFIs which already set up an agric.

unit or agric. desk (Barclays Bank, Builsa Community Bank, Kintampo Rural Bank) and a fourth PFI plans

to set up an agric. unit (Fidelity Bank). Builsa Community Bank expressed that it has now the evidence

from improved monitoring that AGVCF is a viable business to convince management and board to

allocate further resources to it. The agric. desk of Kintampo Rural Bank needs more staff and

equipment. It is not clear to which extent the PFIs - which are not commercial banks - will be able to

dedicate sufficient human and financial resources

(3) Whether PFIs have an agric. lending policy:

In the sample, there were six PFIs, like Builsa Community Bank, Sinapi Aba Savings and Loans,

Ecobank, Barclays Bank, Fidelity Bank, IFS Financial Services where the project coincided with the

institutions’ works on their agric.-related strategies, and the project support came in right on time:

“In absence of USAID FinGAP, our institution could have come up with its own agric. lending

strategy. FinGAP made our strategy more workable, with an improved monitoring and facilitation of

BAS providers.” (Sinapi Aba Savings and Loans) / “We were in a process of doing something

about our agric. policy and the FinGAP gave us more insight how to implement our agric. policy and

how to roll it out.” (IFS Financial Services) / “We did a restructuring of our product offering.

We worked on an Agric. Policy in 2016, and look at our agric. policy, annually. In our 2016 policy,

we looked at rural banks and agric. production and asked ourselves: How can we be relevant in

financing agric. production? Before we would not lend to rural banks and looked differently at MFIs.

Now, we lend to rural and community banks. (…) The health of our portfolio in these three food

crops, can be equally attributed to internal factors and USAID FinGAP. We strongly agree on that.

We are the biggest bank. We have the lowest NPL. We could not have gathered the momentum

drive that has been completed by FinGAP” (Ecobank) / “Our monitoring policy has agric. lending

monitoring standards incorporated. And we know FinGAP is watching over us.” (Fidelity Bank)

There are PFIs which started to draft an agric. policy but need further efforts from their side and

external support (e.g. USAID FinGAP) to complete it: “We were not in agric. at institutional level.

With a training, we drafted an agric. policy. Our agric. policy is still a draft. We need further support

to develop it. Now, we have empowered credit staff. We restructured our agric. segment portfolio

and started to treat agric. differently. Prior, we used normal loan products. We restructured our

loan products and loan conditions to meet seasonality.” (First Allied Savings and Loans) / “We

did a draft loan policy for cocoa farmers and piloted it” (Microfin Rural Bank).

(4) Whether PFIs which have special agric. Loans:

PFIs launched special agric. Loans with support of USAID FinGAP to institutionalize agriculture as a

business line: For example, special farming loans by Tumu Community Cooperative Credit Union,

loan product for women-led agribusiness by Builsa Community Bank, equipment leasing product by

Bonzali Rural Bank.

PFIs also revised existing products: Changes included restructured loan conditions, PFIs starting to

pay input dealers directly, instead of cash disbursement to agric. Producers, disbursement in

tranches (multiple disbursements) and repayment in tranches (multiple repayments), change of

moratoriums. / For example, four PFIs reduced their interest rates to institutionalize agriculture as a

business line. The grant helped them to address operational procedures and reduce operational



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costs. As a result, they could reduce interest rates by 4% p.a to 2% p.a for lending to MRS

customers which helped them to increase their clientele base (Builsa Community Bank, Kintampo

Rural Bank, Success for People Microfinance, Tumu Community Cooperative Credit Union).

Whether the reduced interest rates can be maintained without the grant support from USAID

FinGAP is too early to say. This is influenced by a lot of internal, institution-specific factors and

external (e.g. macro-economic) factors.

(5) Whether PFIs have sufficient finance for on-lending to agric. value chains: Insufficient access

to AGVCF for lending is a critical constraint for PFIs to institutionalize agriculture. The P4P grants section

shows that ten out of 22 PFIs expressed their need to access to competitive AGVCF to lend to their

customers in MRS value chains. They reported constraints in lending either because of too high demand

from their customers or too high interest rates to access AGVCF for on-lending.

3.5 FEATURES OF USAID FINGAP IMPORTANT FOR AN IMPROVED

CAPACITY TO DISBURSE AGRICULTURE VALUE CHAIN FINANCING

This chapter integrates findings on trainings and P4P grants into the bigger picture of USAID FinGAP

support by taking a quick look at other features of USAID FinGAP (cf. red circle below).

There is evidence from the assessment that the ensemble of features of USAID FinGAP played a "very

important" and "important" role for respondents in improving their capacities to disburse AGVCF.

While P4P grants and institution-specific trainings have high shares of respondents rating them as "very

important ", short-term outcomes (cf. Chapters 3.2, 3.3) and medium-term outcomes (cf. Chapter 3.6)

cannot be solely attributed to them. This question was only discussed in meetings with PoCs.




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As Figure 6 in the methodology chapter showed, the meetings with PoCs had a good representation of

PFI staff in management positions (66%): 28% were managers, 19% were general managers or their

deputies, and CEOs, and 19% were heads of units or departments. 17% of interviewed staff from these

meetings with PoCs included people with agric.-related specifications in their titles such as heads of

agric. units or departments (5), agric. finance relations managers (2) or agric. specialist and agric.

coordinator (each 1).

Figure 12 shows the ratings for other USAID FinGAP features. Dark green and light green segments of

each bar reflect “very important” and “important” scores. They indicate how important a feature of

USAID FinGAP was perceived by the respondents for improving their ability to disburse AGVCF.

Responses from PFIs were filtered out when respondents indicated that they had not used the specific

feature ("Not applicable") or could not give a rating ("Do not know"). For example, if a PFI had not yet

had an institution-specific training, or if it did not make use of BAS providers, then the PFI was filtered

out for the respective feature.

Looking at the highest “very important” and “important” ratings, the top three features are:

(1) Items purchased utilizing the incentive grant (P4P grant): 100% of PFIs that had already

utilized their grant rated this feature as "very important" (78%) or "important” (22%). (cf. Chapter

3.3.1 for more details).

36

69

78

75

60

59

53

45

0

22

19

10

29

41

18

15

0

6

30

12

6

0

15

0

0

0

0

0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Other (n=11)

Facilitation from

BAS providers (n=13)

Items purchased utilizing

the Incentive Grant (n=18)

Attending institution-

specific trainings (n=16)

Attending generic

trainings (n=20)

Regular visits (n=17)

Regular phone

support (n=17)


Q10: Which features of USAID FinGAP were important for you, personally, to improve

your ability to disburse agricultural financing? (from meetings with PoCs, n=22)

Very important to me Important to me Moderately important to me Not important to me

Figure 12: Rating of importance of USAID FinGAP features for an

improved ability to disburse agricultural financing



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(2) Attending institution-specific trainings: 94% of PFIs that had received institution-specific

trainings rated the institution-specific trainings either as “very important” (75%) or “important”

(19%) in improving their ability to disburse AGVCF. Compared to this, generic trainings had a lower

share of 70% respondents rating them as “very important” (60%) or “important” (10%) (cf. Chapter

3.2).

(3) Regular phone support by the USAID FinGAP team: 94% of PFIs rated the team’s phone

support as “very important” (53%) and “important” (41%). The team’s support (including visits)

made work seamless and instilled confidence in PFIs to commit to AGVCF despite previous

perceptions of risk associated with financing agriculture:

o Positive statements are representative of the overall feedback for the team’s support:

“The importance of the team’s support is not quantifiable to me. The team makes the

work seamless.” (Barclays Bank) / “Always ready to support and provide

backstopping in times of difficulty” (Stanbic Bank) / “If you can call at any time, it is

comforting to have. We still need handholding, joined visits and discussion and the

supervisory role of FinGAP.” (Fidelity Bank)/ “Follow-up phone calls asking, ‘Why you

are not disbursing?’ provided the opportunity to ask questions.” (IFS Financial

Services).

o There is evidence from the statements of PFIs outside the Greater Accra region that

they highly appreciated the team calling them and visiting them regularly. It also

increased their confidence.

o Some individual comments said there were too many visits or phone calls, but these

were the exception, and the team reportedly tried to accommodate PFIs’ requests to

communicate more via phone/ email/ whatsapp instead of visiting those PFIs whose staff

were mostly in the field.

o One suggestion made by a PFI’s PoC can be discussed further by the team (if not for a

potential six-month extension, then for design of a potential FinGAP 2): The USAID

FinGAP team should have its own PoC per each PFI to avoid overlapping requests from

different team members.

Looking only at the top three features receiving the highest share of “very important” ratings

to improve the FIs’ ability to disburse AGVCF, BAS providers come into play:

(1) Items purchased utilizing the Incentive Grant (P4P grant): This feature has been rated

as "very important to me" by 78% (cf. Chapter 3.3.1).

(2) Attending institution-specific trainings: 75% of PFIs rate them as “very important” (cf.

Chapter 3.2).

(3) Facilitation from BAS providers: 69% of PFIs scored BAS providers’ support as "very

important" in improving the PFIs’ abilities to disburse agriculture financing.

Ten of the sample’s 22 PFIs worked with BAS providers under USAID FinGAP.

Their statements capture the appreciation for the BAS providers’ support, providing them with

quality clients and proposals. The question of who will pay for BAS after USAID FinGAP was



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discussed with these 10 PFIs and six BAS providers. Some qualitative statements are provided

below:

o Lawra Area Rural Bank did not work with BAS providers before USAID FinGAP

because there were no BAS providers in the region. Through testimonies given by other

PFIs about the quality of packages received from BAS providers, the bank involved a

BAS provider in the 3rd and 4th year: “He facilitated ten deals for the branch. All of them

have 100% repayment as compared to other loans.”

o Success for People Microfinance rates BAS provider support as “very important”:

“They helped us get new clients. Some of our key clients came from them. BAS

providers do the analysis of business plans before they give us a client. They pass on low

risk for us.”

o First Allied Savings and Loans considers their support as “moderately important”:

They facilitated almost 50% of the 146 deals closed with SMiLEs. SMiLEs come very

prepared: “But BAS providers raise too high expectations. We say it is sometimes

irritating. They want to push through a loan application, even when we declined it. And

then the SMiLEs are disappointed. Through FinGAP trainings we met them. They call us

when they have new packages and we call them.”

o Builsa Community Bank gave a first rank of importance to BAS provider support:

“Involving BAS providers relieves us with activities that are costly and time-consuming.

A lot of time and processes were eliminated for the bank through the BAS providers

and they bring us to the clientele closer than before. It has increased our clientele base.

We did not know the potential of businesses out there. The BAS providers groom

them, trim them and package the applications according to bank criteria. The BAS

providers’ facilitation has helped with speeding up loan approval within two to three

months. We have adopted a bank policy for approval of USAID FinGAP packaged deals.”

o Barclays Bank, which has a 52.4% share in the disbursements to MRS value chains of

the sample’s 22 PFIs, reports that BAS providers facilitated 19% of its deals under

USAID FinGAP. The PoC ranked their support as third most important feature of the

project, after the trainings and the grant: “Things we would have done, they do on our

behalf. They put bankable deals together. This reduces the lending process decision

from appraisal to approval by close to 20 to 25%.”

o Sinapi Aba Savings and Loans estimates that BAS providers facilitate three out of

five deals: “They are very important. BAS providers ease the work of PFIs. They groom

the SMiLEs for the PFIs. It is a relief for the loan officers. We use their services, because

we do not have to pay for them.”

o Nationwide Microfinance considers their support as “moderately important”: “It

made work much easier and expedited things. But their charges were too high for our

customers, because our loans are already expensive.”

o Ecobank: BAS providers were a new introduction for Ecobank: “The engagement with

BAS providers resulted in SMiLEs coming prepared. BAS providers were looking for an

increase in the number of deals, now they are looking at the monitoring aspect. For a



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BAS provider, it is a sustainable model to add the monitoring for the sustainability

aspect of it. BAS have become a real partner.”

o Three PFIs work with BAS providers that are not part of USAID FinGAP: Okomfo

Anokye Rural Bank has received free services from BAS centers under the Local

Assembly for seven years / Microfin Rural Bank works with BAS providers in its

region that offers technical training to work with their clients. They are paid through the

government’s Rural Enterprise Program (REP) / Nalerigu Community Cooperative

Credit Union has its own consultant.

Payment of BAS providers after USAID FinGAP: The ten PFIs that worked with BAS

providers under FinGAP want to continue working with those who demonstrated good

performance beyond the project, when BAS providers’ fees are no longer subsidized. Some of

the PFIs are considering a payment-by-results arrangement based on the loan recovery rate and

cost-sharing with the clients (Barclays Bank, Builsa Community Bank). Ecobank PoC

considers the remuneration of BAS providers a challenge as the bank’s policy directive appears

to not have a remuneration set for external support. Stanbic Bank wants to continue working

with those who demonstrated good performance. Nationwide Microfinance would pay BAS

providers. It considers the BAS providers’ charges high for its customers because they already

pay high interest rates.

Facilitation from BAS providers – the BAS providers’ perspective:

Six BAS providers interviewed as part of this assessment shared their insights:

Tradeline Consult explained that after USAID FinGAP ends, it expects client SMiLEs to pay

for initial services and for FIs to pay a commission based on SMiLEs’ repayment to the FI.

SAHA Consult anticipates a rise of consultancy costs of BAS providers because of FinGAP

exiting (no more subsidies to BAS providers) and it might become a worry for BAS providers to

cover their operational costs if FIs and SMiLEs do not find arrangements to pay for their

services.

One BAS provider identified the challenge for FIs’ general managers to get approval from the

board of directors to accept services of BAS providers. This can be a challenge for sustainability

(Lifecare Ghana).

MEL Consulting suggested BAS providers look beyond financial facilitation. MEL Consulting

was not focused on agribusiness: “FinGAP drew us in agric. We got soaked in agribusiness and

saw the potential. Demand has led us to establish Agrifed (Association for AGVC). We became

from just finance facilitators to standards setting to find offtakers.”

BFC Ghana said “FinGAP has sort of over-pampered the FIs with free money for the BAS

providers’ services. FIs must know that a good recovery rate is good for every institution. After

FinGAP, they must be willing to pay more for our services.”

Solutions Consulting arranges payment from the SMiLEs: “FIs pass the cost to the SMiLEs.

Either way is borne by the SMiLE. Companies that pay you, cooperate better.”



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Other features important for an improved ability to disburse AGVCF:

For example, Agribusiness Investment Summits were appreciated by attendees. PFIs

perceived them as good for business development, networking with other PFIs, linking up with

BAS providers and (potential) customers. There is evidence from statements that further

cooperation evolved out of this.

In 12/2017, USAID FinGAP co-hosted a Women’s Agric. Finance Summit with MEL

Consulting. MEL Consulting introduced its business model for AGRIFED, an Agricultural Value

Chains Federation that aims to facilitate backward linkages for off-takers when they provide

AGRIFED with purchase agreements. Heritage Bank met MEL Consulting at this summit and said

the bank wanted to finance AGRIFED. Heritage Bank will be the exclusive FI partner of

AGRIFED for three years. By the time of the interview with MEL Consulting, Heritage Bank was

reportedly scheduled to disburse its first financing to AGRIFED in the coming week. Heritage

Bank was supposed to be a grantee under the Limited Solicitation Grant under Window 2, but

had not yet managed to disburse financing to MRS value chains to qualify for a drawdown of

grant money. MEL Consulting mentioned: “Heritage Bank had previously complained that BAS

providers bring deals that to them are not very good. Heritage Bank is going to make a big deal.

It is a win-win for AGRIFED and Heritage Bank.”

3.6 CHANGES OF PFIS’ PRACTICES AND PERFORMANCES AT MEDIUM-

TERM OUTCOME LEVEL

There is evidence that the project, including the PFI trainings and P4P grants, contributed to the

following changes in PFIs’ practices and performances:

(1) Improved risk mitigation in agricultural lending: role of value chain financing approach as risk

mitigation, use of Eximguaranty and Ghana Agriculture Insurance Pool (GAIP) and Development

Credit Authority (DCA) guarantee

(2) Improved confidence of PFIs that AGVCF is a viable way to go (cf. Figure 11)

(3) Increased size of PFIs’ MRS value chain portfolios (cf. Figure 13)

(4) Improved loan repayment in PFIs’ MRS value chain portfolios

(5) Increased size of PFIs’ agric. portfolios (cf. Figure 13)

(6) Improved health of PFIs’ agric. portfolios



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The medium-term outcomes are discussed for PFI trainings and P4P grants, jointly, with more evidence

from qualitative statements received in meetings with PoCs. The PFIs’ ratings on how they perceive the

impact of the project on these changes can be found in Figure 8.

(1) Improved risk mitigation in agricultural lending: 35% of respondents from meetings with

PoCs and 37% online-survey respondents perceive a “strong effect” on an improved risk mitigation

after on-boarding with USAID FinGAP.

PFIs used the value chain financing approach as risk mitigation; most did not use EXIM

Guarantee or Ghana Agriculture Insurance Pool (GAIP). Two PFIs are under the USAID DCA

Guarantee as risk mitigation:

(1.1) PFIs use the value chain financing approach as a risk mitigation. They identified

that improved appraisal and monitoring of loans as well as improved customer relationship

management help them to reduce the loan default risk. Some of their qualitative statements are

provided below.

o Ecobank PoC states that USAID FinGAP has had a “strong effect” when he looks at

parameters such as (a) identifying viable businesses, (b) improved knowledge on the

sector through trainings (Ecobank used its entire grant used for training) and (c) on-

lending: "We do on-lending to RCBs and MFIs and they make sure they cover the risk.

We follow up on how their portfolios are doing like FinGAP does with us." Ecobank did

not do agric. on-lending to RCBs before joining USAID FinGAP. Three of the project’s

PFIs (Builsa Community Bank, Bonzali Rural Bank, Sinapi Aba Savings and




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Loans) accessed finance from Ecobank for on-lending to MRS value chains. The fourth

parameter: (d) EXIM or GAIP were not used by Ecobank.

o Success for People Microfinance utilized a part of grant for loan loss reserves for its

portfolio at risk when its loans to maize value chain customers in Northern Ghana

increased. The PoC reported they were not able to access EXIM, they do crop

insurance with another insurer. She perceived the project’s risk mitigation model as

“strong”, “especially, the EXIM, GAIP and BAS-side of it, and said she even advised

colleagues from other institutions about it.

o Nalerigu Community Cooperative Credit Union says the project has a “strong

effect” on its improved risk mitigation even though it does not use insurance to secure

production. Most of its clients are aggregators and traders who buy from farm gate and

markets. The 2017 droughts and armyworm pest caused a loan default rate of 5.8%.

“But without FinGAP, it would have been worse. Improved monitoring (with the

support of grants, especially bonuses, and trainings) helped focusing on the right things

at the right time.”

o Builsa Community Bank rated the effect on risk mitigation as “moderate”: “We did

not expose ourselves to EXIM guarantee. EXIM looks for big tickets. Most important

risk mitigation is for us the contact with farmers. We did not record so much loan

default. FinGAP brought us to almost all the actors in the value chain (marketers,

offtakers). Therefore, there was no need for EXIM.”

o Okomfo Anokye Rural Bank sees “no effect” on an improved risk mitigation or

improved loan repayment, yet. There are still problems with its agriculture loans,

because some of its big clients defaulted. The bank considers not to target primary

producers any more. Most of its clients are processors and traders.

o PFIs suggested the project should have had its own special insurance package or risk

mitigation fund (cf. suggestions for improving the grant in the chapter on P4P grants).

(1.2) PFIs mostly did not make use of EximGuaranty or Ghana Agriculture

Insurance Pool (GAIP) for risk mitigation: Apart from trainings on risk mitigation, the

project introduced (a) EXIM Guarantee and (b) GAIP in these trainings to the PFIs. EXIM is

perceived as appraising applications for a credit guarantee like a financial institution itself and

deciding too slowly. GAIP is considered too expensive.

(a) EximGuaranty: Two PFIs used EXIM, Barclays Bank and Agriculture

Development Bank (but ADB did not work with them under the project). / To use

EximGuaranty would have required Stanbic Bank Ghana an approval from its

headquarters in South-Africa. / Barclays Bank was introduced to EXIM by the project and

had nine deals with EximGuaranty. Its PoC said: “Deals we would not have done, we do

now as result of EXIM and GAIP.” EXIM gives its approval after the bank has approved. It

uses an internal credit committee for credit approval and refers to the board if a credit

exceeds a certain threshold. EXIM is perceived as too slow. / IFS Financial Services said

they are now insuring loans. EXIM was more like a “third opinion” in its decision to approve

a loan: “If EXIM does not guarantee, it gives us like a third opinion. EXIM instead of being a



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guarantee, ends up evaluating the loan.” / Nationwide Microfinance made efforts to use

EXIM and GAIP: “But there were too many requirements.” / Ga Rural Bank said there

was “no effect” after on-boarding with the project on an improved risk mitigation: “With

EXIM, it is cumbersome: EXIM itself sounded like a financial institution. If you do a due

diligence, you don’t need to get an EXIM guarantee.” / Lawra Area Rural Bank perceives

its risk mitigation as a serious problem for the bank. The effect of FinGAP is rated

“minimal”: “We did not use EXIM guarantee. We were not clear what it entails. The

amount required as collateral was too expensive.”

(b) GAIP: Five PFIs used GAIP: Barclays Bank, Bonzali Rural Bank, Bessfa Rural

Bank, Builsa Community Bank, and Agriculture Development Bank. (But ADB did

not work with GAIP under the project.) / Stanbic discussed with GAIP, but the product

was considered too expensive. / IFS Financial Services got to know about the Ghana

Poultry Project through GAIP: “We got so much encumbered by this, because GAIP wanted

to charge us 10%. GAIP brought it down to 5%. But even that was too expensive for us.” /

Microfin Rural Bank liaised with GAIP to insure subsistence farmers which GAIP

declined. “We provided the loans even when GAIP declined.” / Ga Rural Bank said “We

do not deal with primary producers. We did not use GAIP. We have less information on it.”

(1.3) USAID DCA Guarantee as risk mitigation:

o Fidelity Bank Ghana has a collaboration with the USAID DCA Guarantee which

started prior to USAID FinGAP. The team disciplines itself to not make use of it. The

DCA Guarantee and the FinGAP support complement each other, so the bank saw no

need to try EXIM and GAIP.

o First Allied Savings and Loans reports a very strong effect on an improved risk

mitigation after on-boarding with the project “based on our experiences with a non-

performing loan (the biggest amount we ever gave to a producer; our first entry which

has given us a lot of headache) and the support from FinGAP we received for the loan

repayment. We learned our lessons from this for appraisal of new loans. We use now a

dual-key warehousing system to avoid default of loan repayment. And our logistics from

the grant (motorbikes) come in.” The deal with this producer was under DCA.

(2) Improved confidence of PFIs that AGVCF is a viable way to go, even without

further USAID FinGAP support: “Very confident” rating by 52% of responses from

meetings with PoCs; 54% from online-survey. (cf. Chapter 3.4).

(3) Increased size of MRS value chain portfolios: MRS value chain portfolios increased

according to statements of most respondents (cf. Figure 13): Increased after on-boarding with

USAID FinGAP confirmed by 94% to 84% of responses from meetings with PoCs for the

individual value chain; 94% to 57% from online-survey for the individual value chain. Ranked

among bottom three outcomes.

The USAID FinGAP definition used by the PFIs includes input dealers, agriculture producers,

output processors, traders, and others. This is also confirmed by data from the M&E system (cf.

Annex 8, disbursements by type of value chain actor). Different types of PFIs have a focus in

their lending to different value chain actors (cf. Figures 14, 15).



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o The maize value chain portfolios of 94% respondents from meetings with PoCs and

online-survey have increased.

o The feedback deviates stronger for the two other value chain portfolios. For the rice

value chain, 94% of respondents from meetings of PoC compared to 71% in the online-

survey confirm an increase; for the soy value chain, 84% of respondents from meetings

of PoC compared to 57% in the online-survey confirm an increase. As the online-survey

has an underrepresentation of training participants from commercial banks, the chart

from the online-survey reflects more of the statements from rural and community

banks, savings and loans companies, credit unions, MFIs and the FNGO.

(4) Improved loan repayment in MRS value chains: “Strong” effect after on-boarding with

USAID FinGAP rated by 42% of responses from meetings with PoCs; 31% from online-survey.

Ranked among bottom three outcomes.

Qualitative statements:

o For example, Borimanga Rural Bank: which rated the effect as “strong” said: "Most

recovery and the highest return comes from loans to MRS value chains. Compared to

the bank‘s total portfolio, the loan portfolio has increased in size and quality. People

from WFP and UNDO were surprised when they talked to us. We referred them to

USAID FinGAP."/ Kintampo Rural Bank rated the effect as “strong”: “We have 93%

loan repayment. At first, we could not do regular monitoring, with the grant for

monitoring logistics and operational costs, we can do an improved monitoring, which

has led to an improved loan repayment.”/ Success for People Microfinance also

linked improved loan repayment to improved monitoring: “With capacity building in

monitoring, improved monitoring and the reduced interest rate (through the grant), we

improved loan repayment in MRS. We do not have any default in farmer facilities.”

o “Moderate effect” rated by Bonzali Rural Bank: “There has been an overall

improvement in loan repayment. But two loans struck our feet. Lesson learned: Now,

we look where client is located to know how to cut operational and monitoring costs.

The loan was approved without proper due diligence, without looking at all lose knots,

identifying the risks, profiling them and seeing how the bank can manage them.”/ "We

gave one big loan, the biggest amount we ever gave to a producer, and we took legal

actions to get it back. Our management does not favor lending to agriculture producers

because of that case. We use now a dual-key warehousing system to avoid default of

loan repayment." (First Allied Savings and Loans)

o Four out of thirteen PFIs which on-boarded under Window 2 state that it is

still early/ too early to see an improved loan repayment in MRS value chain portfolios

– and this applies also to the health of the agric. portfolio - (cf. chapter P4P grant,

statements from IFS Financial Services, Agriculture Development Bank,

Okomfo Anokye Rural Bank and Fidelity Bank Ghana). For example, because

the loan cycle is not finished yet. There are also institution-internal and external factors

affecting loan repayment in MRS value chain. The project investigates non-performing

loans under a separate short-term technical assistance. In terms of the health of the



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overall agriculture portfolio, Agriculture Development Bank, for example said that MRS

is only a small part of it and that it is not in the sphere of influence of the team met.

(5) Increased size of agricultural portfolio: Figure 13 shows that 90% from meetings of

PoCs and 94% from online-survey responses report an increase of their agric. portfolio after

onboarding with the project. Figure 8 shows that 57% of respondents from meetings with PoCs

and 70% of online-survey respondents perceive a “strong effect” of USAID FinGAP on this

increased size of their agric. portfolios. As such it is the first-ranked outcome. This is in line with

the project’s purpose. Chapter 3.3.2 provided evidence that ten out of 22 PFIs expressed their

need to access to competitive AGVCF to lend to their customers. They reported constraints in

lending either because of too high demand from their customers or too high interest rates to

access AGVCF for on-lending.

Qualitative statements on the strength of the effect of USAID FinGAP on an increase of the

agric. portfolio are provided here:

o “Strong effect” ratings: Barclays Bank Ghana reports an increase of its agric.

portfolio by 14% to 24% within three years of joining the project. Currently, the agric.

portfolio is at 16%, because of a problem with cocoa. Barclays’ agric. team in Ghana has

been awarded the Best Agric. Team in Africa prize by Barclays / Fidelity Bank Ghana

sees the complementary effect of FinGAP support in MRS and the bank’s collaboration

with USAID DCA. / IFS Financial Services rates the effect as “strong”: The DGM

said “I asked my staff every morning and at week meetings and sales meetings: Are we

disbursing to meet the milestones?” / Success for People Microfinance also gave a

“strong effect” rating: “With capacity building from FinGAP and reduction of the

interest rate (from the grant), our agric. portfolio has grown. We knew which questions

to ask at appraisal and what to expect or whether a customer hides some things.” /

Ecobank Ghana reports a forty-fold increase of its agric. portfolio for MRS: Before

2013/2014, we disbursed less than USD 500,000 to MRS. Now, we disburse

20,000,000.”

o “Moderate effect” rating: Sinapi Aba Savings and Loans: “Yes, FinGAP has

contributed. The growth of the agric. portfolio started from BAS providers’ end.”

o “Minimal effect” rating: Nationwide Microfinance says the size of the agric.

portfolio has increased, “But it is a seasonal business. When the season is good, it affects

us positively. We increased disbursement to transport and other areas of the value

chain. But we are short in funds.”

(6) Improved health of our agricultural portfolio: “Strong” effect after on-boarding with

USAID FinGAP rated by 44% of responses from meetings with PoCs; 24% from online-survey.

Ranked among bottom three outcomes for respondents in online-survey. There are also

internal, institution-specific and external factors which influence the health of the agric.

portfolio.

Qualitative statements:

o The four PFIs under Window 2 that stated that it is still early/ too early to see an

improved loan repayment in MRS value chain portfolios also applied this to statements



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on improved health of their agric. portfolios (cf. Chapter 3.1.3 for statements made by

IFS Financial Services, Agriculture Development Bank, Okomfo Anokye Rural Bank and

Fidelity Bank Ghana).

o "Strong effect" ratings: "The particular value chain aspect, promoted by USAID

FinGAP, had effects on the health of the agriculture portfolio” (Borimanga Rural

Bank) / "When other crops came, we applied what we learned. So, our total portfolio

has increased and improved in health." (Kintampo Rural Bank)

o “Moderate effect” rating by Bessfa Rural Bank: "Performance of staff has

improved: When we measure the result by when repayment is made, the result is very

good. But the repayment rate is poor (85-87%). Some groups have not been honest to

pay back. Some credit officers were dishonest."

o “Not applicable” for Ga Rural Bank: Primary production is not applicable for us.

Most of our clients are caterers for schools which are under the Government Child

Feeding Program which has free education and free lunch. This has increased the

demand for MRS. Our clients take loans to buy MRS from primary producers.”



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Figure 13: Change in size of PFIs' agriculture and maize, rice and

soy value chain portfolios

57

71

94

94

31

18

0

2

4

2

4

2

2

4

2

2

6

6

0

0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Soy value chain** portfolio (n=51)

Rice value chain** portfolio (n=51)

Maize value chain** portfolio (n=52)

Overall agriculture* portfolio (n=53)


Q12 How has the size of your agriculture portfolio changed since your institution

joined USAID FinGAP? (from online-survey, n=63)

Increased in size No change in size Decreased in size Do not know Not applicable

(*) as defined by Central Bank, covering primary producers, only; (**) as defined by FinGAP, covering value chain actors (input dealers, agricultural producers, output processors, traders, others)

84

94

94

90

0

0

0

5

0

0

0

0

0

0

0

5

16

6

6

0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Soy value chain** portfolio (n=19)

Rice value chain** portfolio (n=18)

Maize value chain** portfolio (n=18)

Overall agriculture* portfolio (n=21)


Q23 How has the size of your agriculture portfolio changed since your institution

joined USAID FinGAP? (from meetings with PoCs, n=22)

Increased in size No change in size Decreased in size Do not know Not applicable

(*) as defined by Central Bank, covering primary producers, only; (**) as defined by FinGAP, covering value chain actors (input dealers, agricultural producers, output processors, traders, others)



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ENABLED PFIS TO EXPAND THEIR REACH TO NEW AGRIBUSINESSES

(AND TO OTHER CLIENTS)?

There is evidence that trainings and P4P grants enabled PFIs to expand their reach to new agribusiness

clients through two key success factors: the value chain financing approach promoted by the project;

and FIs’ increased confidence and capacities to venture into AGVCF through the team’s support, the

trainings, and the P4P grant.

Figures 14 and 15 show that, after on-boarding with USAID FinGAP, the 22 PFIs have increased

disbursement of AGVCF to MRS value chains by USD 108,563,478 and have expanded their reach to

2,626 new agribusiness clients. Thus, the MRS portfolios have increased in terms of new loans disbursed

and new agribusiness clients. (cf. also Figure 13). 55% of these loans were disbursed to input dealers,

20% to agriculture producers, 12% to output processors, 11% to traders, and 2% to other.

Two success factors enabling PFIs can be identified:

1. The USAID FinGAP-promoted value chain approach to agricultural financing enabled PFIs to

become more aware of how to mitigate perceived risks in agricultural lending. FinGAP has

improved the link between FIs and SMiLEs. PFIs were introduced to value chain actors (for

example, at Agribusiness Investment Summits, booklets with investment opportunities). One PFI

started on-lending to RCBs, which it had not done prior to FinGAP.

2. The second is the confidence and capacities built in PFIs through the project by the entire

USAID FinGAP team through: its constant follow-up with and encouragement of PFIs to venture

into AGVCF, trainings enabling PFIs to see that AGVCF is less risky than their prior perception

of traditional agricultural lending, and the P4P grant enabling PFIs with financial resources to

improve their outreach to new SMiLES.

Trainings and P4P grants have contributed to the improvement of PFIs’ capacities to disburse AGVCF,

which in turn enabled them to attract new agribusiness clients (cf. chapters on trainings and P4P grants)

by following the value chain approach.

P4P grants and trainings increased PFI staff motivation/ skills/ equipment (especially, vehicles,

motorbikes, fuel) to increase the frequency of visits and geographical outreach to new districts/

more distant areas to reach new SMiLEs.

Improved agribusiness customer relationship management enabled PFIs to expand

their reach to new agribusiness. PFIs did a new targeting of customers and PFIs perceive they

now understand (potential) customers better.

New agribusinesses were attracted by mobilizing value chain actors, by reaching out to

potential SMiLEs via local FM stations and by referrals from customers, by using trainings of

SMiLEs as an opportunity to strategically bring value chain actors together which brought new

agribusiness customers for the PFI.

PFIs that used the grant to make their operational procedures more efficient and

reduced their operational costs could lower the interest rates by 4% to 2%. These PFIs

were able to attract new clients and advance more disbursements.



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Through new/ revised products targeted at AGVCF, PFIs were enabled to reach new

customers.

BAS providers who participated in PFI trainings and Agribusiness Investment Summits were linked up

with PFIs. Those PFIs who made use of BAS providers’ services report their importance of bringing new

quality clients. (cf. chapter on features of USAID FinGAP)

The different types of PFIs have different main customer groups: Commercial banks disbursed

69% of loans to input dealers. Savings and loans companies, credit unions and one financial NGO

disbursed majorly to agricultural producers (74%; 63%; 79%). Rural and community banks and

microfinance companies disbursed more than half their loans to traders (58%; 52%).

(1) The five commercial banks rank first by share of disbursement to MRS value chains (79% of

all 22 PFIs). Loans were disbursed to 2% of SMiLEs. Input dealers were their largest client group,

to which 69% of loans were disbursed. Much smaller share of loans went to agricultural

producers (14%) and output processors (11%).

(2) The nine rural and community banks rank second in disbursement (only 7%). They disbursed

AGVCF to most SMiLEs (62%). Of loans disbursed, 58% were granted to traders, followed by

2%

13%

9%

62%

10%

4%

Share of SMiLEs in MRS value chains

to which AGVCF was disbursed by type of PFI

(from M&E system, status 02/2018: 22 PFIs disbursed to 2,626 SMiLEs)

5 Commercial/ Universal

Banks (52 SMiLEs)

3 Savings and Loans

Companies (340 SMiLEs)

2 Credit Unions

(220 SMiLEs)

9 Rural and Community

Banks (1,636 SMiLEs)

1 Financial NGO

(272 SMiLEs)

2 Microfinance Institutions

(106 SMiLEs)

79%

3%

5%

7%

2%

4%

Share of AGVCF disbursed to SMiLEs

in MRS value chains by type of PFI

(from M&E system, status 02/2018: 22 PFIs disbursed USD 108,563,478)

5 Commercial/ Universal

Banks (USD 85,212,748)

3 Savings and Loans

Companies (USD 3,408,018)

2 Credit Unions

(USD 5,381,132)

9 Rural and Community

Banks (USD 7,505,877)

1 Financial NGO

(USD 2,575,315)

2 Microfinance Institutions

(USD 4,480,388)

55%

20%

12%

11%

2%

Share of AGVCF disbursed to SMiLEs in MRS value chains

by type of value chain actor

(from M&E system, status 02/2018: 22 PFIs disbursed USD 108,563,478)

to Input dealers

(USD 59,320,981)

to Agriculture producers

(USD 22,247,301)

to Output processors

(USD 12,559,920)

to Traders

(USD 11,790,806)

to Others and Non-Agric.

(USD 2,644,470)

Figure 14: Overview on AGVCF disbursed to MRS value chains



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agricultural producers to which 28% of loans were disbursed and 13% to outputs processors.

FinGAP's definition of a SMiLE with minimum 11 employees was useful to encourage banks to

bring in groups instead of individual loan applicants: Two rural banks had not disbursed loans to

groups before. / "FinGAP brought us almost all the actors in the value chain. (marketers, off-

takers). The most important risk mitigation is for us the contact with farmers. We did not

record so much loan default, because we have access to marketers, off-takers. (Builsa

Community Bank)

(3) The two credit unions rank 3rd by share of disbursement (5%) and they disbursed to 9% of

SMiLEs. 62% of their loans were granted to agriculture producers, followed by 28% of loans to

traders. Their membership has increased, even though this could not only be attributed to

USAID FinGAP. However, the success of the groups under the project attracted new group

members and more customers for the credit unions: „FinGAP gave us courage to expand.

Before we covered 15 communities, now we cover 21 communities. Our membership has

increased from 2,000 to 2,500.“ (Nalerigu Community Cooperative Credit Union).

Tumu Community Cooperative Credit Union has increased membership from 3,600 to

7,700.

(4) The two microfinance institutions rank 4th by share of disbursement (4%) disbursed to 4%

of SMiLEs. The disbursed their majority of their loans to two groups: traders (52%) and output

processors (40%).

(5) The three savings and loans companies rank 5th by share of disbursement (3%). But they

rank second in terms of share of SMiLEs (13%) of total PFI sample. Most of their loans (74%)

went to agriculture producers. Loans to the other value chain actors are in the one-digit range.

"Our overall agriculture portfolio has not changed drastically (plus 7%). It was growing naturally.

But with FinGAP we got into new areas and got new customers. Approx. 50% of new deals

were facilitated with support of BAS providers." (First Allied Savings and Loans) / "I am

unsure about exact figures, but an estimated three out of five deals with SMiLEs were facilitated

by BAS providers." (Sinapi Aba Savings and Loans)

(6) The financial NGO ranks 6th by share of disbursement (2%), but it ranks third in terms of

share of SMiLEs (10%). Most of its loans (79%) were granted to agriculture producers and 19%

to traders.



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Figure 15: Share of AGVCF disbursed to MRS value chain actors by

type of PFI

0.4%

28%

13%

58%

0,8%

Amount of AGVCF disbursed by Rural and Community Banks

to SMiLEs in MRS value chains by type of value chain actors

(from M&E system, status 02/2018: 9 RCBs disbursed USD 7,505,877)

Input Dealers

Agricultural Producer

Output Processors

Trader

Other

2%

79%

0%19%

0%

Amount of AGVCF disbursed by Financial NGO


(from M&E system, status 02/2018: 1 FNGO disbursed USD 2,575,315)

Input Dealers


Output Processors

Trader

Other

6%

74%

6% 9%

5%

Amount of AGVCF disbursed by Savings and Loans Companies


(from M&E system, status 02/2018: 3 S&Ls disbursed USD 3,408,018)

Input Dealers


Output Processors

Trader

Other

3%

63%1%

28%

5%

Amount of AGVCF disbursed by Credit Unions


(from M&E system, status 02/2018: 2 CUs disbursed USD 5,381,132 )

Input Dealers


Output Processors

Trader

Other

0%

8%

40%52%

0.2%

Amount of AGVCF disbursed by Microfinance Institutions


(from M&E system, status 02/2018: 2 MFIs disbursed USD 4,480,388)

Input Dealers


Output Processors

Trader

Other

69%

14%

11%

3% 3%

Amount of AGVCF disbursed by Commercial/ Universal Banks


(from M&E system, status 02/2018: 5 CUBs disbursed USD 85,212,748)

Input Dealers


Output Processors

Trader

Other and Non-Agriculture



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IMPACTED THE HEALTH OF THE AGRICULTURE PORTFOLIOS?

There is evidence how trainings and P4P grants have improved capacities of PFIs to disburse AGVCF and

how this contributes to the short- and medium-term outcomes (Chapters 3.2, 3.3 and 3.6) including an

improved health of PFIs’ agric. portfolios.

USAID FinGAP has facilitated a considerable increase in loans disbursed by PFIs to MRS value chain

SMiLEs and PFIs confirm the “strong effect” on the increase of the agric. portfolio: (57% of responses

from meetings with PoCs and 70% in the online-survey (cf. Figure 16).

However, the share of those PFIs already seeing “improved health of the agriculture portfolio” is lower:

44% of responses from meetings with PoCs and 24% in the online-survey (cf. Figure 16). For Window 2

PFIs, it appears early to see more of this medium-term outcome.

In Chapter 3.6, PFI statements confirmed that an improved health of the agricultural portfolio takes time

to manifest, even though an increase of the agriculture portfolio is already there. Four out of thirteen

PFIs which on-boarded under Window 2 directly stated that is still early/ too early for them to see an

improved loan repayment in MRS value chain portfolios and an improved health of their agric. portfolios.

Interviewed PFIs mentioned that after increasing their disbursement, they were stepping back from

further investment to wait and see whether loan repayment rates are adequate, before they invest




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further. These PFIs are now at a pivotal point in time: if loan repayment from primary producers12 drops

and PFIs are not able to mitigate the risk, this might affect their confidence to further disburse to

agriculture producers, and they might rather choose other value chain actors for non-direct lending to

primary producers.

For example, Ecobank PoC explains that the NPL is higher for direct lending to agric. producers (not

done under FinGAP) while the NPL is lower for non-direct loans to agric. producers (under FinGAP).

It was shown in Chapter 3.4 that PFIs are confident that AGVCF is a viable way to go, beyond USAID

FinGAP, while they also expressed the need for further training and additional grants for their institution

in support of AGVCF (cf. Annex 11). If there is a follow-on to USAID FinGAP, this will be an important

window of opportunity to ensure that the current momentum is carried forward to help PFIs progress

more towards the medium-term outcomes.

12 PFIs apply the definition of “agriculture portfolio” by the Bank of Ghana when measuring their agriculture

portfolios. USAID FinGAP target are MRS value chains and the 22 PFIs disbursed 20% of loans directly to agriculture

producers, while 80% were disbursed through other value chain actors.

70

57

24

44

26

29

70

39

4

14

6

6

0

0

0

11

0% 20% 40% 60% 80% 100%

Increased size of

agricultural portfolio


Increased size of



Improved health of

our agricultural portfolio


Improved health of



% of meetings with PoCs; % of online-respondents



(from meetings with PoCs, n=22, and online-survey, n=63)


70

57

24

44

26

29

70

39

4

14

6

6

0

0

0

11

0% 20% 40% 60% 80% 100%

Increased size of



Increased size of



Improved health of



Improved health of



% of meetings with PoCs; % of online-respondents



(from meetings with PoCs, n=22, and online-survey, n=63)


Figure 16: Rating of effects on size and health of agriculture

portfolio after on-boarding with USAID

Figure 17: Level of agreement to which health of own

portfolio can be attributed to USAID FinGAP and/ or

internal or other factors

Figure 910: Likelihood of changes in disbursing agricultural

investment being sustainable, even without USAID

FinGAPFigure 911: Level of agreement to which health of

own portfolio can be attributed to USAID FinGAP and/ or




















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Perceived attribution of the health of respondents’ own portfolios to USAID

FinGAP, internal and other factors

Figure 17 confirms the relevance of the intertwined approach used by USAID FinGAP with its different

features including trainings, P4P grants, BAS providers, and risk mitigation tools. Respondents are aware

that internal, institution-specific factors as well as external factors also play roles. The dark green and

light green colors indicate when respondents “strongly agree” or “agree” to the attribution of a feature

to their portfolio’s health.

Generic trainings: A higher share of respondents from meetings with PoCs (64%) compared

to the online-survey (42%) “strongly agrees” that the health of their own portfolios can be

attributed to generic trainings.

Institution-specific trainings: The share of respondents in both groups is similar: 60% of

respondents from meetings with PoCs and 58% in the online-survey “strongly agree” that the

health of their portfolios can be attributed to institution-specific trainings.

P4P grants: While it is only 60% of responses from meetings with PoCs who “strongly agree”

that the health of their own portfolios can be attributed to the P4P grants, it is 72% of online-

survey respondents.

Internal, institution-specific factors were, for example: a PFI already has good performance

(for example, in RCB performance ranking), a PFI took a strategic decision to go for agric.

lending prior to or coinciding with FinGAP, the existing motivation of the PFI’s team; and

management buy-in. 53% of respondents from meetings with PoCs and 38% “strongly agree”

that internal, institution-specific factors can be credited with the health of their agic. portfolios.

External factors mentioned, for example: loan repayment attitude of customers; the

Government program “Planting for food”, which grants a 50% subsidy to agric. inputs13; and the

Government “Child Feeding Program”, which has free education and free lunch and has

increased the demand for MRS. Caterers take loans to buy MRS from the primary producers.

Other external effects: droughts/ floods/ pests; a contracting economy at national level; the

interest rate policy of the Bank of Ghana.

13 The Government program “Planting for food” has different effects on the interviewed PFIs: (a) improved liquidity

for more quality loans to processors, traders, (b) meant less disbursement of loans to agric. producers, fewer

customers for the FI; (c) borrowers cannot pay the remaining 50% to FIs which participate in the Government

program.



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67

40

60

60

64

36

53

22

30

40

40

36

57

35

0

10

0

0

0

7

6

11

20

0

0

0

0

6

0% 20% 40% 60% 80% 100%

BAS providers (n=9)

Use of risk

mitigation tool (n=10)

Incentive Grants (n=15)

Institution-specific

trainings (n=10)

Generic trainings (n=11)

attributable to USAID FinGAP:

Other factors (for example,

macro-economic) (n=14)

Internal factors

in our institution (n=17)


Q23: In your opinion, to which extent would you attribute the health of your portfolio

to USAID FinGAP and/ or internal or other factors? (from meetings with PoCs, n=22)

Strongly agree Agree Disagree Do not know

31

38

72

58

42

21

38

63

56

25

37

50

57

62

4

2

4

2

0

19

0

2

4

0

4

8

4

0

0% 20% 40% 60% 80% 100%

BAS providers (n=52)

Use of risk

mitigation tool (n=52)

Incentive Grants (n=53)

Institution-specific

trainings (n=52)

Generic trainings (n=48)

attributable to USAID FinGAP:

Other factors (for example,

macro-economic) (n=53)

Internal factors

in our institution (n=53)


Q13: In your opinion, to which extent would you attribute the health of your portfolio

to USAID FinGAP and/ or internal or other factors? (from online-survey, n=63)

Strongly agree Agree Disagree Do not know

Figure 17: Level of agreement to which health of own portfolio can be attributed to USAID FinGAP

and/ or internal or other factors



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3.9 WILL THE SHIFT IN THE WAY PFIS DISBURSE AGRICULTURAL

FINANCING BE SUSTAINABLE EVEN WITHOUT USAID FINGAP

SUPPORT?

There is evidence that it is very likely/ likely for most respondents that the changes in how they disburse

agricultural financing are sustainable. But they also expressed the need for further training and for

additional grants (cf. Annex 11). In the online-survey, 13% of respondents think it is “unlikely” for them

to sustain the changes. (cf. Figure 18). Loan repayment rates and access to competitive AGVCF for PFIs

are issues affecting sustainability of changes in PFIs’ practices and performances.

PFIs positively perceive that the changes have been added to their body of knowledge: “The

changes how we disburse agric. loans, including MRS value chains, have become part and parcel of our

work.” These statements by Borimanga Rural Bank and Tumu Community Cooperative Credit

Union are representative for the feedback throughout the interviews. Staff have improved abilities to

disburse agric. loans, including MRS value chain financing. Institutionalization appears to be a challenge

(cf. Chapter 3.4).

“If recovery rates do not start dropping, we want to continue.” (Kintampo Rural Bank). It is

a key issue for PFIs to see an adequate loan repayment, after they have increased their agricultural loans

to MRS value chains. It was shown in Chapter 3.6 that for Window 2 PFI grantees it is yet early to see

such an improved loan repayment rate in MRS value chains.

There are concerns of four PFIs that without the grant, they might not be able to maintain reduced

interest rates, and therefore might have a lower demand from customers for their products as they did

while working with USAID FinGAP.

Ten out of 22 PFIs expressed their need to access competitive AGVCF to lend to their customers is an

issue for PFIs affecting sustainability. The PFIs reported constraints in lending either because of too high

demand from their customers or too high interest rates for funding.

19%

76%

0%0%

5%

Q25: Do you think the changes in how you disburse agricultural

investments are sustainable, even without USAID FinGAP support?


Very likely (n=4)

Likely (n=16)

Unlikely (n=0)

Very unlikely (n=0)

Do not know (n=1)

30%

55%

13%

2% 0%

Q7: Do you think the changes in how you disburse agricultural

investments are sustainable, even without USAID FinGAP support?


Very likely (n=16)

Likely (n=29)

Unlikely (n=7)

Very unlikely (n=1)

Do not know (n=0)


investment being sustainable, even without USAID FinGAP



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Market access as an issue for sustainability: More remote PFIs such as Bessfa Rural Bank have

challenges with the market access for their customers. “Maize does not have a reliable buyer. We need

to work on marketing aspect, get aggregators and processors, etc. on board.”

The challenge to pay BAS providers was raised by PFIs which wanted to continue working with them.

Ecobank Ghana PoC put it like this: “Now you have got the momentum in it. Let it become a habit.

Let’s do another five years”. Throughout the interviews, there were similar statements of respondents

from other PFIs suggesting adding another one to five years to see results manifest (including Barclays

Bank advocating for a FinGAP 2 for the sector. Borimanga Rural Bank expressing that it would need

another two years. IFS Financial Services: “We need another 1-2 years of FinGAP support: It is too

early, we just joined in 2017. We are still not strong enough to stand alone. There is no impact yet on

people on the ground.”



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4 IMPLICATION OF FINDINGS

The key development hypotheses upon which USAID FinGAP was designed can be confirmed with

evidence presented in Chapter 3. There were effects of grants and trainings on PFIs’ operations,

“beyond new financing out the door”.

The smart incentives (P4P grants) motivated the 22 PFIs to increase their agricultural financing.

The proof of concept is established and PFIs are confident that AGVCF is a viable way.

From the assessment it appears, that the proof of concept still needs to be more established for

the thirteen Window 2 PFIs. They are at a pivotal point in time: They seem to be not long

enough into the project to have sufficient evidence of a medium-term outcome like “improved

loan repayment rates in MRS value chains”. For them, USAID FinGAP concludes at a point in

time, at which they have increased their disbursements to MRS value chains and now need to

see an adequate repayment rate.

Technical capacities to disburse AGVCF have improved with the support of PFI trainings and

P4P grants, and PFIs have started to put internal structures in place. But institutionalization

appears still a challenge: PFIs do not have all parameters considered relevant for

institutionalization of AGVCF in place.

For most respondents from PFIs it is very likely/ likely that the changes in how they disburse

agricultural financing are sustainable. But they also expressed the need for further training and

additional grants (cf. Annex 11). If there is an extension of USAID FinGAP or a follow-on, this

will be an important window of opportunity to ensure that the current momentum is carried

forward to help PFIs progress more towards medium-term results.

Access to competitive AGVCF to lend to their customers is an issue for PFIs affecting

sustainability of changes in practices and performances.

4.1 IMPLICATIONS FOR DESIGN AND DELIVERY OF PFI TRAININGS

(1) Design of a six-month curriculum on AGVCF: A six-month curriculum in which PFI

staff are regularly away for training for 1 week instead of 2 days, offering a blend of presence-

based and online trainings, field visits and study visit(s) abroad can be a more systematic way to

build strong capacities of PFI staff, designated by the PFI with the commitment to stay on for the

six-month training and dedicated for agric. finance (recruited by the FI for agric. finance and

nothing else) who can focus their attention on learning and applying what they learn. Five years

of experience with trainings in AGVCF enable USAID FinGAP to design modules useful for PFIs

to bring their agric. finance staff up to speed.

(2) Matching internal PFI staff with an USAID FinGAP training specialist/ external

trainer of AGVCF (ToT in AGVCF). PFIs have branches in which not all staff members

were trained, yet, and can apply the concept of AGVCF. In addition, the two credit unions’

PoCs mentioned that they were contacted by several other credit unions which were interested

to join USAID FinGAP and sought for advice on AGVCF. PoCs from RCBs expressed that other

RCBs were still into traditional agriculture lending and not aware of the AGVCF concept. Thus,

respondents from a couple of PFIs, including Builsa Community Bank, Bonzali Rural Bank,



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Microfin Rural Bank, Kintampo Rural Bank and Okomfo Anokye Rural Bank, First

Allied Savings and Loans explicitly requested/ suggested the training-of-trainers. The USAID

FinGAP training specialist, FSSU manager and external trainers could be teamed up with internal

staff of PFIs to conduct trainings. Over time the matching can enable the internal PFI staff to run

the trainings independently of external support. The USAID FinGAP FSSU manager and training

specialist can design such a training-of-trainers and discuss the approach with training

participants from the PFIs, their training departments who might become trainers for their PFI. It

will need discussion to which extent BAS providers might be trained into such trainers.

(3) Additional institution-specific trainings for PFI staff: There is a considerable demand

for more institution-specific trainings in all PFIs. In the case of an extension of USAID FinGAP or

a follow-on, Annex 11 includes training topics in which PFIs have identified additional gaps at the

institution level to be addressed: in loan appraisal, loan monitoring (incl. application of

monitoring tools; field visits on how to do monitoring) and recovery and AGVCF; risk

mitigation; good agricultural practices and mechanization of agriculture, operating a warehouse

receipt system, portfolio management, customer care/ stakeholder relationships (for most PFIs

also preferable on weekends, mostly branch-by branch). Two PFIs have identified a need for an

institution-specific training format for their board and committee members (Tumu Community

Cooperative Credit Union, First Allied Savings and Loans). Bessfa Rural Bank leads a task force

for loan recovery in the district value chain committee which would need institution-specific

training. Additional training for in-house staff ranked equally high in demand as an extension of

the P4P Grant (in both, meetings and online-survey).

(4) More training for SMiLES: PFIs see the benefit of training their customers and the effect

it has on their loan repayment. It was also suggested by PFIs that trainings cover all value chain

actors, linking them up with each other and PFI staff.

4.2 IMPLICATIONS FOR DESIGN AND DELIVERY OF P4P GRANTS

(1) In the case of a follow-on to USAID FinGAP with grant money allocated to P4P

grants: Among the 22 PFIs, there is an equally high demand for additional grants and additional

institution-specific training (cf. Annex 11). Below are the priorities for utilization of grants:

o Top priority is for PFIs to acquire (additional) vehicles/ motorbikes and other logistics

for an improved loan monitoring which in the medium-term is showing (and expected to

show) improved loan repayment rates. For PFIs’ medium- to long-term commitment it is

essential to have evidence of improved loan repayment rates.

o Motivational packages (bonuses/ incentives, allowances) to officers directly involved in

the appraisal, disbursement, monitoring and recovery of loans

o IT hardware, and financial reporting software for automation of operations

o Setting up a warehouse facility for storage to help SMiLEs to deposit their produce at a

fee to manage post-harvest losses and benefit from future high prices

o Purchasing/ subsidizing of mechanization equipment to be provided to customers at a

fee



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(2) An increased grant share of loans disbursed for financial institutions, which are not

commercial banks, because they have a higher risk of direct agriculture lending can be a design-

option for a future P4P Grant.

(3) P4P Grant with built-in "Retention Incentive": A design option for a new grant can be

to consider a good recovery rate as an additional incentive, if a follow-up project (for example,

FinGAP 2) will decide to continue working with the current 22 PFIs. "Increased disbursement"

appears to be no sufficient outcome for the medium- and long-term sustainability of AGVCF. If

non-performing loans are rising, PFIs are challenged to increase disbursement.

(4) Grant share calculated using different parameters, apart from only looking at

amount disbursed: In the sample, the five commercial banks disbursed USD 85,212,748 which

accounts for 78.5% of total agricultural disbursements made by the 22 PFIs (cf. Table 6.). The

achievement of milestones triggered grant payments worth USD 1,731,758 which are 70% of the

22 PFIs’ grant money. The commercial banks disbursed to 52 out of 2,626 SMiLEs. 69% of their

disbursements were made to input dealers (cf. Figure 14). While other types of PFIs disbursed

smaller financial amounts, they reached more SMiLEs and – apart from the microfinance

companies – they had higher shares of their portfolio directly disbursed to agricultural

producers, which is considered riskier lending. A design-option for consideration of a P4P Grant

would be to look at additional parameters apart from "amount disbursed". Prior to design, an

ex-ante evaluation can investigate whether such additional parameters would be favorable to the

very concept of AGVCF, or rather skew it.

(5) Special insurance package directly provided through USAID FinGAP itself to

cover all production loans to give financial institutions more confidence to disburse to

agricultural producers.

(6) Risk mitigation fund for financial institutions having a higher risk compared to commercial

banks from direct agricultural lending to primary producers. There was a suggestion for USAID

FinGAP to consider that the project pays part of the risk and brings in DCA.

(7) Agriculture Value Chain Finance Facility providing access to competitive funding

for financial institutions to enable them to lend to their customers at lower interest rates and at

longer tenure: Ten out of 22 PFIs expressed their need to access to competitive AGVCF to lend

to their customers. Agriculture Development Bank is already collaborating with KfW, the

German bank for reconstruction, which has allocated financing to the Outgrower Value Chain

Facility (OVCF). A design-option for consideration for a P4P Grant can be to design in

parallel an agriculture value chain finance facility which can be accessed by PFIs under

the project. Potential sources of funding could be for example: KfW, European Investment Bank

(EIB) or Development Partners.

(8) Grant coverage for additional crops and additional geographical regions:

Respondents referred to the grant’s limitation to MRS value chains and the NDA zone, while

their PFI's region had other relevant crops useful for consideration under the grant:

o In Brong Ahafo: yam, cashew, cassava, mango (Kintampo Rural Bank)

o Extend to Central and Western Regions: more clients in MRS. (First Allied Savings

and Loans)



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o Include Central and Volta Region: cassava, pineapple, cocoa, vegetables

(Microfin Rural Bank)

o Include Western Region: peppers, tubers, pineapple, ginger, gari processing

(Ga Rural Bank)

o Include other sectors: millet, yam and cassava. (Borimanga Rural Bank)

o Extend to Coastal Zone and other crops, “because Ghana is exporting vegetables

and fresh fruits. The EU ban has been lifted.14" (Ga Rural Bank).

(9) Demand from additional financial institutions for capacity building in AGVCF:

Both credit unions participating in USAID FinGAP reported that other credit unions in the

North called them for advice on AGVCF and that they were interested to join the project. At

RCB level, a PoC sees a need for capacity building for more RCBs, "as even today, most RCBs

have the mindset, we had 5 years ago".

4.3 IMPLICATIONS FOR ASSESSING PFIS’ CHANGES OF PRACTICES AND

PERFORMANCES OF VALUE CHAIN FINANCING

An assessment like this one, aiming to measure PFIs’ changes of practices and performances in

disbursement of value chain financing through PFI trainings and P4P grants, benefits from a results chain

developed at a project’s design stage. Thus, when a future project intends to do a similar assessment,

the results chain used in this assessment can be reviewed/ revised in a participatory approach.

Quantitative and qualitative outcome indicators should be assigned to each outcome (one to three

indicators15 per outcome; no output indicators). This can help to have more quantitative evidence in

tracking changes of PFIs’ practices and performances than in this assessment for which the results chain

was designed at the time of the assessment.

14 Web source Ghanaian Times: The EU ban has been lifted in 11/2017 for five vegetable crops: chili pepper, bottle

gourds, luffa gourds, bitter gourds, eggplants, after Ghana took significant corrective measures to improve

inspection and control system for plant health at exit points.

15 Good outcome indicators are SMART: specific, measurable, attributable, realistic and targeted/time-bound.

usaid fingap assessment of incentive grants and training ... · 3.8 sow question 4: how have...

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