The agric sector: What’s wrong?

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Agriculture plays crucial role in the Ghanaian economy, and provides the main source of food, income and employment to their rural populations.

Around 65% of the country’s workforce work in the sector and it contributes significantly to its gross domestic product (GDP). From Ghana’s total land area of 23.9 million hectares, about 57% is suitable for agricultural purposes.

Despite the key role played by farming in the economy, agricultural development is being hamstrung by ineffective public-private coordination.  It is essentially a matter of coordination failure as the sector was stifled by a lack of joined-up thinking.

Agriculture contribution to GDP over the years has shown a steady reduction from 35.4% in 2006 to 34.3 in 2007 and to 33.59% in 2008. The growth rate of the sector however doesn‘t show any clear trend. The growth rate reduced from 4.5% in 2006 to 4.3% in 2007 and increased to 5.17% in 2008. In 2013, the contribution of the agriculture sector to GDP has reduced to 22 percent from 40 percent.

While agricultural output has improved since 2000, analysts agree that the scale of the growth remains poor in Ghana and other parts of sub-Saharan Africa. According to data from the World Bank, agricultural GDP growth in sub-Saharan Africa averaged 2.3% per year in the 1980s and rose to 3.8% per year between 2000 and 2005.

However, much of this growth is a result of an expansion in the areas of cultivation, rather than a proportional increase in yields, said Ramesh Moochikals, president and regional head of the south and east Africa division of the supply chain management firm Olam.

Issues such as a lack of education and training for young people, poor and underdeveloped infrastructure and difficulties in accessing markets, were well known and widely acknowledged, but little is done to resolve them.

The question is if the problems are known and if even the solutions have been identified, why is it that it is not moving forward?

Business Day has come to the conclusion that it is essentially a matter of coordination failure. It’s not only a matter of growing more commodities, it’s a matter of making value out of it. You have a game here where one partner is in a standby position waiting for the other to move first.

Government needs to improve first the infrastructure or clean up governance issues or reduce corruption or improve the institutional setup and provide universities more vocational training facilities.  When this happens, then the investors would be eager to move in.

Consequently, there is the need to broker some kind of coordination among these different agents to make sure resources converge in an aligned way towards one particular goal.

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