$13.5bn agric sector set for 20.6% contribution to GDP over 4 years – Deloitte Ghana
According to a recent report by Deloitte Ghana, agriculture is projected to contribute an average of 20.6% to Ghana’s GDP from 2023 to 2026. The report also projects an average GDP growth rate of 4.1% over the same period, reflecting the potential of the agriculture sector to drive economic growth in the country. The country’s agriculture sector is worth $13.5bn as at 2022 and its contribution to GDP was 19.9% in the same year.
However, the report also highlights challenges that the sector faces, such as inefficiencies in the value chain, which create opportunities for private sector investors to develop innovative solutions that will help increase productivity and profitability.
The ongoing Russian-Ukraine war has increased global food insecurity and inflation, and Ghana has not been immune to this trend. The Ghanaian government has therefore intensified its efforts to support private sector investors in the agribusiness value chain, including staples and grain production, meat production, and input and fertilizer supply, to improve food security and reduce food inflation. With the population projected to increase to 41 million in 2035, and the urbanized population growing by 10 million over the same period, there will be a growing demand for food, which will drive demand for agricultural products.
Deloitte notes in its report that, to address inefficiencies in the sector, the government has introduced policies such as Planting/Rearing for Food and Jobs, One District One Warehouse, One District One Factory, and One Village One Dam. These policies are expected to be driven by the private sector, with the government playing a facilitator role. The government has also established the Ghana Commodities Exchange, which links the activities of commodity producers and buyers, and has cut foreign exchange support for the importation of non-essential goods that can be produced locally.
According to Deloitte, the continuous depreciation of the Ghana cedi in 2022 provides an opportunity to ramp up local food production for key food items such as rice, wheat, oil palm, and onions. As imported food items become relatively more expensive, ramping up production can help cover the import bill for rice (1.3 million tonnes), wheat (0.8 million tonnes), oil palm (0.3 million tonnes), chicken (0.3 million tonnes), onions (0.009 million tonnes), soybean (0.08 million tonnes), and cattle (0.04 million tonnes), which can drive growth in the agribusiness sector.
Despite the potential of the agriculture sector, the sector continues to face challenges along its value chain, such as inadequate infrastructure, limited access to finance, and a lack of technological innovation. However, these challenges, Deloitte points out, present opportunities for investors that can provide innovative solutions to deliver value for the Ghanaian market. Several private sector players have already developed innovative solutions to reduce the risk of running agribusiness operations, with the emergence of data mining and analytics businesses and machinery support services organizations, among others. These players are providing the needed support to facilitate the activities of value chain actors, enabling better decision-making to drive growth and return for investors in the sector.
Overall, the report by Deloitte Ghana highlights the importance of the agriculture sector in Ghana’s economic development, and the potential for private sector investment to help drive growth and improve productivity in the sector. While challenges remain, the sector presents opportunities for investors that can develop innovative solutions to address inefficiencies in the value chain, increase productivity and profitability, and contribute to the overall development of the sector.
