Pain points and growth for Ghana’s agricultural sector stakeholders

Investor attention is firmly trained on public financial management (PFM) in Ghana. Not without reason[1]. And yet, there are other, equally powerful market dynamics at play driving business risk and opportunity.

The services sector accounts for more than 50% of GDP today but primary commodities are the lion’s share of exports – in particular, gold, cocoa and oil, which together are almost 85% of the total[2]. Moreover, agriculture is still the largest employer in the country. Despite this, Ghanaian farmers have been operating with more constrained access to essential services than similarly endowed countries and neighbours e.g., 29kg fertiliser per hectare in Ghana, 31kg per hectare in Cote d’Ivoire, 52kg per hectare in Zambia and 90kg per hectare in Morocco[3].

The then-newly elected New Patriotic Party (NPP) introduced its ‘Planting for Food and Jobs’, providing subsidised seeds and fertilisers[4] in this context. It has been one of its most popular policy initiatives. Perhaps even more so than free secondary education. However, in light of the current PFM pressure, the government has announced significant reductions in the fertiliser subsidy. It is a decision that coincides with:

An historic increase in international fertiliser prices. See rows 1-3 and 9 in the table adjacent.
Similarly noteworthy international price increases for cash and food crops commonly cultivated in Ghana such as palm oil and soybean.
Still constrained banking sector credit to the private sector and particularly agricultural activities.

This is a situation that creates pain in communities and moderate political risk as a result. Groups like the General Agricultural Workers Union are calling on the government to reverse itself.

However, this may also be a state in which demand for private-sector and third-sector businesses that can step into the breach has increased, and their commercial viability has improved. Perhaps even more so if these organisations can help farmers, cooperatives and manufacturers to directly and more seamlessly access export opportunities.

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[1] Ghana's credit rating moment. Songhai Advisory.

[2] Ghana is the second largest cocoa producer in the world and the largest gold miner in Sub-Saharan Africa

[3] World Bank data (2018)

[4] Amongst other policies to improve access to inputs

*Photo credit. Markus Winkler

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