Monday, 12 March 2018

Investments in Ghana's agric sector declining - experts

Image result for agricultural sector has witnessed declining trends in contribution to GDP

According to the 3rd Ghana Economic Update report from the World Bank, the agricultural sector has witnessed declining trends in contribution to GDP since the year 2010 while there has been a rise in the extractive industries which appears to be constraining the agricultural sector growth.

Program Lead from the World Bank, Errol Graham, said improving the environment for agricultural businesses is necessary to avert any negative future consequences.

He said, “Agriculture’s share of GDP is falling and this could be a result of a number of factors. One clear case we see is that the share of industry is rising and the share of services is also rising and so that’s crowding out the share of agriculture.”

“Usually that happens when the revenues for the extractives sector from oil increases hands-on and that causes an appreciation of the exchange rate and that crowds out some of the non-tradable sectors including agriculture,” he added.

Mr. Graham said, “It’s a question we are asking because we don’t see it happening yet, but it could happen, and so, what the report is doing is raising awareness to the potentials for that to happen for action to be taken before it happens.”

He has, therefore, urged the government not to relent in its resolve to execute one of its flagship programs – ‘Planting for Food and Jobs. ‘

Consequently, an Agriculturalist Anthony Morrison, President of the Chamber of Agribusiness wants government to consider the setting up of an Agricultural Development Authority to regulate the production and marketing of agricultural products so as to attract the needed investment into the sector.

“We need an Agricultural Development Authority to regulate sector’s trade, and also the production and market aspects. We need to protect indigenous investments going into the sector, then when the sector is thriving, we can attract foreign investors into the sector.

We have seen the amount of investments that have come into the petroleum and telecommunications sectors after the National Petroleum Authority (NPA) and the National Communication Authority (NCA) were established. If we have a sector that is not well regulated to protect people’s investments, it is going to be serve as disincentive,”

Mr. Morrison was speaking as a panelist at a CanCham Breakfast event on the topic: “Investing in Agribusiness”

He noted though the country’s prospects for agribusiness is huge, investors, both local and international, need some form of assurance and protection to venture into the sector, which is seen as a high risk sector.

“The sector is a trade sector and ought to be given the utmost protection. If you do not protect an industry, we do not expect anyone to come and do any meaningful investments. We need a local protection system which will give the sector a boost and be able to encourage investors to come in,” he said.

The Annual Percentage Rates (APR) and Average Interest (AI) report for January 2018 released by the Bank of Ghana (BoG) has shown that the lending rate to the agriculture sector remains high.

The average lending rate to the sector, according to the report, stands at 30.4 percent.

Also, Managing Director of Stanbic Bank, Alhassan Andani, is noted to have said, “From where we stand, we are very, very far away from where agribusiness can attract the most important resource that every sector needs, which is money.
We have to collaborate to create the enabling environment that enables farmers, agribusiness people to access the most important resource—money—in a very competitive manner. So, we have to have a national level organisation that makes agribusiness something that people will look up to.”

He added that: “We have to have, within the national economy, an agri-sector organisation that makes agribusiness very attractive; and we must have – at the farmer or business unit level – an organisation that makes the deployment of capital into these units profitable,” he added.

The World Bank recommended that there is the need to improve the quality and effectiveness of public expenditure. According to the bank, it would be important in the context of the limited fiscal space.

It has also called for an improvement in the environment for the sector’s businesses; this is relevant to adding value to the existing production and for jobs creation.

“There is need to channel public resources into research to increase the use of technology, invest in irrigation infrastructure to increase productivity and mitigate the potential adverse effects of climate change, and leverage increased private sector investment in agriculture.” Senior Agriculture Economist and Co-author at the World Bank, Hardwick Tchale said.