Report: Channel More Resources into Research to Arrest Declining Agric Sector

Participants at the launch

Accra, March 6, 2018//-Ghana has been urged to channel more 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, according to the latest World Bank report.

The report dubbed-‘3rd Ghana Economic Update: Agriculture as an Engine of Growth and Jobs Creation’ which was launched in Accra explained that channeling more resources into the agric sector could stop the sector from declining.

Speaking at the launch of the report, an economist at the World Bank Ghana office, Kwabena Gyan Kwakye lamented: “The agricultural sector is key for foreign exchange earnings, but the sector’s contribution to GDP growth has been declining”.

He added that the sector had experienced a sharp deterioration in its Terms of Trade since 2011.

The Terms of trade (TOT) represent the ratio between the export prices of a country and the import prices. The ratio is calculated by dividing the price of the exports by the price of the imports and multiplying the result by 100. When a country’s TOT is less than 100%, more capital is leaving the country than is entering the country. When the TOT is greater than 100%, the country is accumulating more capital from exports than it is spending on imports, according to economists.

Mr Kwakye noted: “In Ghana, public spending on agriculture is not only low, but also on a declining trend since 2009”.

However, under the 2003 Maputo Declaration, all African countries committed to allocate at least 10 percent of their budgets to agriculture. Ghana is not meeting this commitment.

Touching on jobs creation in the sector, Mr Kwakye said: “Agriculture in rural areas is the employment of last resort ; which highlights the sector’s role in jobs creation and poverty reduction”.

But: “Most people employed in agriculture are likely to be underemployed, and are likely to be in the rural areas”.

The report confirmed that the dominant source of employment is crop and livestock production which accounts for more than 75 percent of output of the agric sector.

“Low productivity is the major cause of low earnings and under employment:, it added.

Comparing cereal yield at 1.7 tonne per hectare with many countries in Africa, Ghana meets the yield target but its performance is below its peers like Rwanda and Brazil.

To improve the agric sector’s performance, the research called for the implementation of policy reforms to enhance the quality and effectiveness of public expenditure in agric; enhance the environment for agric businesses; and fixing the cocoa sub-sector.

If these reforms are in place, the agric has the potential to be one of the leading sectors for a more diverse economy and can be transformed to be an engine of growth and jobs creation.

“Agriculture has a very large multiplier effect on employment, creating over 750 jobs for every additional $1 million of output”.

On economic performance, the country’s macroeconomic performance improved in 2017 after a difficult 2016. The economy expanded for the fifth successive quarter in September 2017, at a rate almost double that of 2016.

The report noted that the service sector bounced back, and the fiscal consolidation is paying off. The inflation rate is also down to close of 10 percent.

Despite the positive outlook, challenges remain including further containing inflation and strengthening and deepening the financial sector to lower interest rates.

By Masahudu Ankiilu Kunateh, African Eye Report

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