Ghana's agricultural sector plays a crucial role in the country's economy, contributing significantly to GDP and employment. However, the sector faces challenges such as resource-driven growth, suboptimal public investment prioritization, and misalignment of policies with climate and sustainability goals.
Key findings:
- Resource-driven growth: Recent agricultural growth in Ghana has been primarily input-driven rather than productivity-driven, with public support focusing on input use rather than efficiency, leading to unsustainable growth.
- Misguided public spending: Current expenditures dominate public spending in agriculture, limiting allocation to capital investment, which is essential for upgrading value chains, increasing productivity, and ensuring sustainability.
- Cocoa sector challenges: Despite significant funding, inefficiencies persist in the cocoa sector, with the COCOBOD Turnaround Strategy having the potential to generate positive net gains that could be reinvested in other sectors.
- Untapped productivity potential: Potential-yield gaps and limited investment in R&D and extension services (especially e-extension) hinder agricultural efficiency and output quality, and limit climate resilience.
- Implementation shortcomings: Budget execution rates for government spending in agriculture are uneven, and inefficiencies limit the effectiveness of government and donor-funded projects.
Recommendations:
- Repurpose public spending: Shift subsidies to capital expenditures, enhance spending efficiency, integrate climate objectives, adopt gradual stop-gap measures, leverage technology, and attract private and partner financing for sustainable, productivity-led agricultural growth.
- Advance comprehensive farmer support: Adopt a holistic value chain approach, integrating digital platforms, non-public extension systems, climate-smart practices, and inclusive agribusiness models to enhance impact, sustainability, and job creation.
- Improve public expenditure planning and execution: Address inefficiencies, enhance agricultural expenditure data collection, integrate climate objectives into planning, and adopt project-level apportionment parameters for accurate, efficient, and sustainable resource allocation.
- Increase profitability and transparency in the cocoa sector: Positive COCOBOD earnings should fund cocoa and non-cocoa agriculture, and reforms should enhance transparency in MOFA reporting on cocoa-related expenditures.
- Address inefficiencies in agricultural development projects: Focus on project design, capacity building of farmer-based organizations, innovative financing, complementary investment in infrastructure, and public-private partnerships.
Key data:
- Agriculture's share of Ghana's GDP averaged 21% from 2012 to 2021, with 37% of men and 29% of women employed in the sector.
- The agricultural sector's real value added grew by an average of 4.5% per year between 2012 and 2021, driven by intensification, price incentives, and expansion of cultivation areas.
- Real agricultural expenditures have stagnated in absolute terms and declined as a share of total central government expenditures, with only 26% allocated to capital investment.
- The AOI score averaged 0.23 between 2012 and 2021, indicating that agriculture receives a smaller share of government spending than its contribution to GDP.
- The PFJ campaign led to increased production of crops like maize and rice but suffered from issues with beneficiary targeting, extension services, marketing, and e-agriculture.
Research conclusions:
Ghana needs to strategically overhaul its agricultural investment approach and adjust policies to enhance productivity, reduce inefficiencies, and ensure a more equitable and effective distribution of resources within the sector. This includes repurposing public spending towards capital expenditures, advancing comprehensive farmer support, improving public expenditure planning and execution, increasing profitability and transparency in the cocoa sector, and addressing inefficiencies in agricultural development projects.
