Programme Report

Beyond the balance sheet: Factors shaping loan repayment among agribusiness smes in Ghana ABSTRACTAccess to finance remains critical for the growth and sustainability of agribusiness SMEs in  Ghana. However, loan repayment challenges continue to undermine financial institutions’ willingness to extend credit to this sector, limiting rural economic development and  agricultural productivity. Despite numerous localized studies, there remains a lack of systematic synthesis of the diverse factors influencing loan repayment among agribusiness SMEs. This study addresses that gap by conducting a systematic review of empirical and  institutional studies published between 2012 and 2024. The findings reveal that financial literacy, loan size and structure, farm profitability, collateral requirements, loan diversion, group lending mechanisms, and environmental shocks are among the key determinants of repayment performance. The results highlight the multidimensional nature of repayment behavior, shaped by borrower characteristics, institutional practices, and external vulnerabilities. Enhancing financial literacy, streamlining loan processes, strengthening monitoring, and improving market access are essential to improving loan recovery rates. A resilient financial ecosystem that supports SME adaptability and mitigates systemic risks will be crucial to catalyzing sustainable rural economic transformation. The study offers critical insights for policymakers, lenders, and development practitioners seeking to strengthen agribusiness finance in Ghana. Keywords: Loan Repayment, Agribusiness SMEs, Financial Literacy, Credit Access, Ghana, Agricultural Finance INTRODUCTION Ghana’s agricultural sector remains a backbone of its economy, contributing approximately 20% to its Gross Domestic Product (GDP) and employing over 33% of the labor force (Ghana Statistical Service, 2023). Agribusiness SMEs, small and medium-scale enterprises  operating along the agricultural value chain, play a pivotal role in advancing rural development, ensuring food security, and enhancing income opportunities, particularly for women and youth. Despite their importance, agribusiness SMEs face persistent challenges in accessing and repaying credit. Financial institutions continue to label the sector as high-risk due to loan default rates, weather-related uncertainties, limited financial records, and the informal nature of many agribusiness operations. According to the Bank of Ghana (2022), non-performing loans in the agricultural sector were estimated at 15.4%, compared to a national average of 12.2%, illustrating the magnitude of the challenge. Understanding the factors that influence loan repayment is essential for addressing these gaps. Improved loan recovery benefits not only financial institutions, by strengthening their confidence to lend, but also agribusinesses by ensuring their sustained access to credit. Download Report