Outgrower and Value Chain Fund (OVCF)

The Government of Ghana has secured funds through bilateral Financial Cooperation with the Federal Republic of Germany through KfW Development Bank for the establishment of an Outgrower and Value Chain Fund (OVCF) for the promotion and financing of outgrower and value chain development. It is intended, that part of the funds is used to recruit a fund management service. The OVCF is a refinancing vehicle for providing finance for medium and long term investments through the banking sector. It is designed to fill a gap in agricultural financing. The overall goal is to improve the income of target groups, especially small scale farmers, upgrade the competitiveness of small commercial farmers and their agribusiness partners (processing etc) in their respective markets and thereby contribute towards rural growth and poverty reduction. The primary objective of the fund is to provide medium to long term loans to commercially viable value chains and especially outgrower schemes. The development of small scale commercial farms requires adequate linkages to markets and the management of the production in such a way, that the produce meets the requirements of these markets. The OVCF favors the concept of outgrower farming which is based on defined contractual relations between the outgrowers, a Technical Operator (TO) i.e. processor, trader etc and a Financial Operator (FO) i.e. participating bank, which provides access to services, inputs and funding. The investment realized through the OVCF shall directly contribute to the improvement of the quantity and/or the quality of production in selected value chains. The day to day management of the OVCF shall be carried out by a consortium that provides fund management services. The Fund Management Team, though housed within MoFA, shall not occupy a line function within the Ministry. The duties of the Fund Management TTeam shall among others be: Day-to-day management and coordination of the OVCF; Receiving funding request and processing them in accordance with eligibility criteria before submitting them to the Technical Compliance Committee (TCC) and Steering Committee (SC); Serving as secretary to the Technical Compliance Committee (TCC), which is responsible for screening applications for compliance; Analysing and developing specific financial products for adoption by participating banks Identifying existing value chains and sensitizing actors on it for possible financing; and Commissioning specific technical studies as and when needed, all in furtherance of the objectives of the Fund; and Carrying out of any other activities relevant for the pursuit of fund objectives. The office of the Fund Management Team will be situated in MoFA in order to make use of MoFA’s specific knowledge and human skills to assist the applicants (before and after the application). MoFA has the general responsibility to provide advisory services to farmers. The team will also have the responsibility to commission specific technical and socio economic studies when there is a need.