GHS 364m reduction in capex for agric sector to affect flagship programmes
Capital expenditure (CAPEX) for agriculture sector has been on decline in the last three budgets – since 2020 – with stakeholders forecasting that the constant phenomenon could deny the sector the needed growth particularly the quest to expand national irrigation schemes and investments in machinery and equipment for farming activities.
A trend analysis of CAPEX to the sector from the year 2020, shows that allocations have dropped from GHS 611.7 million in 2020 to GHS 606.1 million in 2021 and drastically reducing to GHS 247.7 million as stated in the 2022 budget.
Capital expenditure or capital expense is the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land.
For MoFA, the reduction in CAPEX yet again for next year could negatively affect infrastructure development in the sector.
SEND Ghana, a policy research and advocacy civil society organization in its analysis of the budget projected that the occurrence could affect progress of flagship programmes such as the Planting for Food and Jobs among other initiatives.
“Putting less money into capital infrastructure for agriculture basically means that there would not be enough revenue for the development of irrigations schemes and other equipment that farmers require to cultivate. This could lead to food shortage if the rains disappoint,” Harriet Nuamah-Agyemang, Senior Programme Officer of SEND Ghana indicated.
Investment in irrigation schemes is a major driver for all-year round farming activities as farmers would not have to heavily rely on the rains before planting.
This, according to SEND Ghana, requires that government commits more money into capital investments to create the enabling environment in order to ensure food security.
With the decline, increase in agro processing, employment of young people and having surplus foodstuff for exports could be hindered due to the drop in expenditure for the sector.
Agriculture sector shrinks in growth rate
Growth rate of the agriculture sector shrunk on a year-on-year basis.
According to the Minister for Finance, the agriculture sector recorded an average growth of 4.9 per cent in the first half of 2021 compared with 8.1 per cent for the same period in 2020.
“The agric sector grew by 4.3 per cent and 5.6 per cent in the first and second quarters respectively, compared with 10.2 per cent and 5.6 per cent in the corresponding quarters of 2020,” the Minister noted.
He said the forestry and logging subsector recorded the highest average growth performance of 5.8 per cent in the first half of 2021, representing a significant increase from the average contraction of 8.1 per cent recorded in the corresponding period in 2020.
The crops (including cocoa) subsector grew by an average of 4.7 per cent over the first half of 2021, based on growth performances of 4.9 per cent and 4.5 per cent in the first and second quarters, respectively.
This average growth, Mr Ofori-Atta noted, “is a significant slowdown from the 9.5 per cent recorded over the same period in 2020”.
However, he added, the “cocoa subsector performed strongly, with an average growth of 11.2 per cent over the first half of 2021, compared to 0.9 per cent in the corresponding period of the previous year”.
Also, the fishing sector “contracted in the first quarter by 3.6 per cent but recovered considerably in the second quarter with a growth of 12.7 per cent, resulting in an average growth of 4.6 per cent over the first half of 2021”.
“This, however, represents a slowdown compared with the average of 18.1 per cent recorded over the same period in 2020”, he noted.