Ghana’s strength lies in agriculture, and therefore structures must be developed to support and fund the sector to grow the economy and create employment for the millions of unemployed youth, Celeste Fauconnier, Senior Global Markets Researcher at the Rand Merchant Bank (RMB), South Africa has said.
Ms. Fauconnier, who was speaking at the 3rd Edition of the First National Bank’s Economic and Business Breakfast Forum held in Accra said: “One of the things that Ghana has failed to do as a nation is look at where it has comparative advantage. Agriculture is a key sector, but the problem is in the structures.
“Ghana can actually thrive by diversifying the economy and not depend on oil, which makes it an attractive destination; but in agriculture, if they make good use of the resources and give the right incentives, why not?”
The agriculture sector has seen its contribution to the economy drop sharply – from 31.8 percent in 2009 to 18.3 percent last year.
Despite government introducing its flagship Planting for Food and Jobs programme in 2017 to increase investment in the sector and help boost production, its impact – at least from the 2016/2017 figures – show little was achieved.
The Planting for Food and Jobs programme experienced a temporary setback when Fall Army Worms (FAW) invaded huge hectares of farms.
It is estimated that about 113,000 hectares of farmlands were affected, of which 15,000 hectares were completely destroyed.
Despite these setbacks, Ms. Fauconnier believes that the sector holds the key to the country’s development, given its competitive advantage in the area.
“One thing that’s very clear is that not that much has been done in the agriculture sector, which remains a weak sector. And so, I would say go exactly to the weak spots and try and grow those.
“Though some gains have been made in the new oil found in 2010, not much has been done in agriculture and I think they could have done more. This, you can see, has affected the growth rate in the agricultural sector.”
Growing the economy’s size
On how to grow the size of Ghana’s economy, she said: “The country needs to put in measures to rope-in the informal sector to be become formal, in order to increase the size of the economy.
“I think what Ghana has to do is to grow its economy by capturing the huge informal sector and drawing them into the formal sector, just as Nigeria did a few years ago by rebasing its economy. This brought in some sectors that were never part of the formal sector, and just bringing that to the numbers you will see that your actual GDP numbers expand. And, of course, you need the growth rate to keep on expanding.”
She added that: “I think with the growth rate of 8.5% last year and 8% potentially in 2018, Ghana can easily move into the top-10 most-preferred investment destinations. The private sector must receive a major boost from government in order to engineer the growth,” she added.
Pointing out that the private sector over the years has been crowded out, Madam Celeste said this makes it difficult to get credit for it: “We know that it is also the reason why the central bank has brought down the policy rate to where it is now meant to spur the private sector participation and growth. Government and the private sector need to sit together more and discuss what it is that each will have to do to achieve growth and increase the economy’s size.”
Meanwhile, she admitted that government is currently in a very difficult position as it has to stop or cut spending and at the same has to help grow the economy, making it a very precarious position; but she believes that with the right measures Ghana can make things work.
Ghana drops one place
The 2018 edition of Where to Invest in Africa report revealed that Ghana, previously at fourth among the top-10, due to perceptions of worsening corruption and weaker economic freedom slipped to fifth – though it remains among the most attractive investment destinations in West Africa.
The survey reveals that despite a myriad of economic challenges, the country labours on as it slowly rebuilds confidence in its processes and policies under the watchful eye of the International Monetary Fund (IMF).
The theme for Where to Invest in Africa 2018 is ‘Money Talks’, and this edition “follows the money” on the African continent to evaluate aspects crucial to each country’s economic performance. The report focuses on the main sources of dollar revenues in Africa, which allows it to measure the most important income-generators and identify investment opportunities.