Investing in Ghana (Part 3):
Productive Sectors - Agriculture
To follow the progress of the insight, we encourage you to access the previous series on the Ghana Invest website.
Productive Sectors
Without a doubt, good governance fosters the growth of the private sector. Given the scale and magnitude of the opportunities that could be leveraged from effective and positive private sector reforms, it has become imperative that Ghana develop a coherent policy approach to establish a hospitable regulatory framework.
Testing the pulse and accessing the opportunities across multiple key and real sectors of the Ghanaian economy will be the focus of our next episodes.
Sectoral components of the economy’s GDP, such as agriculture, industry, and services, are the productive sectors. It reflects the viable, creditworthy picture of an emerging economy.
AGRICULTURE
Agriculture is still one of the most significant economic sectors in many African nations. The bulk of the population in sub-Saharan Africa works in agriculture, which contributes 14% of the region’s overall GDP.
Additionally, each nation on the continent relies heavily on the export of crops, including cotton, coffee, tobacco, oranges, citrus, and tobacco.
Agriculture is more important than ever for the future of Africa and the rest of the globe, even if the continent’s population is expected to more than double by 2050.
The agricultural sector of Ghana employs an estimated 44.7% of the labor force. Farming, forestry, and fishing have all become important economic and social activities in Ghana.
However, the COVID-19 outbreak, which caused local food prices to rise in several regions of the nation, placed the sector’s growth into stark contrast. Although the nation is a significant producer of cocoa, the growth of value-added businesses related to processing agricultural products is still in its infancy.
Climate change, deforestation, a lack of mechanization, and the difficulty for smallholder farmers of achieving economies of scale are further difficulties. Overall, the ability to develop innovative financing strategies inside the industry will have a significant impact on performance in the coming years.
Ghana Invest has been at the forefront of facilitating private sector businesses and investors to find opportunities in Ghana’s agricultural value chain.
Economic Contribution
“Data from the Ghana Statistical Services shows agriculture’s contribution to GDP was 21.8% in 2015, rising to 22.5% a year later and declining to 18.5% in 2019. The figure recovered in 2020, reaching 20.5% of GDP, at a value of GHS73.8bn ($12.6bn).
At least in part, Ghana’s mining and energy sectors’ explosive growth over the same period was to blame for the overall negative trend.
“The segment with the largest contribution to economic output in 2020 was crops, accounting for 16.6% of GDP, or GHS59.9bn ($10.2bn); followed by livestock at 1.7% of GDP (GHS6.1bn, $1bn), forestry and logging at 1.1% of GDP (GHS4.1bn, $700.7m), and fisheries at 1% (GHS3.7bn, $632.3m).” Oxford Business Group
Policy & Regulations
In order to create and carry out policies and strategies for the agriculture sector within the framework of a coordinated national socio-economic growth and development agenda, the Ministry of Food and Agriculture (MOFA) serves as the primary agency and focal point for the government of Ghana.
The Ministry exists to promote sustainable agriculture and thriving agribusiness through research and technology development, effective extension, and other support services to farmers, processors, and traders for improved livelihoods.
The agriculture value chain also involves other key government agencies and bodies such as the Ministry of Fisheries and Aquaculture Development, the Ministry of Lands and Natural Resources, and the Ministry of Local Government and Rural Development.
The Ghana Export Promotion Authority, for its part, promotes exports such as cocoa, roots and tubers, tuna and lobster, as well as processed wood products, domestically produced chocolate and agri-business goods, amongst others.
Ghana’s Import Substitution Plans
Ghana continues to be a significant food importer; in 2021, it is anticipated that imports of agriculture and associated goods will be estimated at a total of $1.9 billion.
Imports of food and agricultural products will continue to increase because Ghana’s weak food processing industry cannot keep up with rising demand. The majority of food imports are comprised of bulk, intermediate, and consumer goods such as rice, wheat, soybean meal, and poultry.
In an attempt to reduce the demand for foreign currency and to strengthen the local Ghanaian currency; to create jobs, stimulate innovation, and ensure the country’s independence in such areas as food, defence, industry, and advanced technologies, the West African country has been embarking on an aggressive import substation campaign facilitated by the Ministry of Trade and Industry.
“… The President launched a comprehensive programme for industrial transformation which the President launched. Basically, this transformation program is anchored on two parallel tracks. First to ensure that we produce to export, and secondly, that we produce for the purposes of import substitution. ” said Hon. Alan Kyerematen, Ghana’s Minister for Trade and Industry.
One-District, One-Factory (1D1F)
There is high demand for imported food products, especially intermediate and consumer-ready products, due to the limited selection of products provided by the underdeveloped domestic agricultural and food-processing sectors.
The government launched an ambitious industrialization program aimed at situating a factory in every district of the country. The government is doing this in partnership with private investors.
According to the latest figures (August 2022), the 1D1F has 76 factories already set up and operational out of a total of 232 projects.
It is worth noting that, in the agro-processing space, Ghana has already seen a breakthrough with its flagship fruit juice processing brand called “Eku Juice,” which is currently expected to be exported to different countries, including key markets such as the US and UK.
Agro-processing
A rise in the demand for processed foods is one effect that rising household earnings and urbanization in Ghana are predicted to have. It is still unclear whether the anticipated increase in demand would present opportunities for domestic agro-processing to expand.
The agro-industry efforts are linked to the One-District-One-Factory program, which is equally comprised of various incentives for private sector investments into agro-processing.
Depending on the activity and location, different incentives are offered. A five-year corporate tax holiday is offered for processing, cash crops, and animals, and depending on where they are headquartered, agro-processing businesses may benefit from lower tax rates.
Additionally, businesses can profit from investment protection plans, dividend repatriation programs, and export promotion initiatives.
Planting for Food and Jobs
Smallholder farmers are the vital link to the realization of Ghana’s agricultural transformation, with agribusinesses sparking job creation and economic advancement.
More political, policy, and financial commitments from the public and commercial sectors are needed in order to sustain and scale success in the sector.
The Ghana government launched a flagship program called Planting for Food and Jobs (PFJ) in order to create food security and produce the raw materials to feed the agro-processing industries while creating jobs in the process.
“Planting for Food and Jobs” is a flagship agricultural campaign of the government with five (5) implementation modules. The first module, PFJ (Crops), aims to promote food security and the immediate availability of selected food crops on the market and also provide jobs.
The five Modules are:
- Food Crops (PFJ)
- Planting for Export and Rural Development (PERD)
- Greenhouse Technology Villages (3 Villages)
- Rearing for Food and Jobs ( RFJ)
- Agricultural Mechanization Services (AMSECs)
Ghana’s agriculture sector and value chain present huge opportunities for private sector players, leveraging on the government’s clear policies, incentives, and commitment to the sector.
Additionally, there’s a growing middle class driving consumption of high-value food products, demand for intermediate products due to a growing food processing industry; consumers looking for ready-to-eat products as per capita income grows; Ghana remains the ideal regional distribution logistics hub etc.
To be continued…
About Ghana Invest
Ghana Invest is a private diaspora-led organization dedicated to the promotion of Ghanaian trade, industry and investment abroad.
We are facilitating sustainable flow of growth capital & businesses to Ghana.
Connect with us to today to gain unparalleled access to viable opportunities across multiple sectors.
