Based on the 3rd Ghana Economic Update report from the World Bank, the Agric sector has witnessed declining trends in contribution to GDP since the year 2010 while there has been a rise in the extractive industries which appears to be constraining the agricultural sector growth.
Program Lead from the World Bank, Errol Graham, said improving the environment for agricultural businesses is necessary to avert any negative future consequences.
He said, “Agriculture share of GDP is falling and this could be a result of a number of factors. One clear case we see is that the share of industry is rising and the share of services is also rising and so that’s crowding out the share of agriculture.”
“Usually that happens when the revenues for the extractives sector from oil increases hands-on and that causes an appreciation of the exchange rate and that crowd out some of the non-tradable sectors including agriculture,” he added.
Mr. Graham said, “It’s a question we are asking because we don’t see it happening yet, but it could happen, and so, what the report is doing is raising awareness to the potentials for that to happen for action to be taken before it happens.”
He has, therefore, urged the government not relent in its resolve to execute one of its flagship programs – ‘Planting for Food and Jobs.
The World Bank recommended that there is the need to improve the quality and effectiveness of public expenditure. According to the bank, it would be important in the context of the limited fiscal space.
It has also called for an improvement in the environment for the sector’s businesses; this is relevant to adding value to the existing production and for jobs creation.
“There is need to channel 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.” Senior Agriculture Economist and Co-author at the World Bank, Hardwick Tchale said.
Positive 2018 Economic Outlook
The country’s economic outlook this year is positive but challenges remain – according to a release from the World Bank.
It says the macroeconomic performance improved in 2017 after challenges in 2016. The country’s economy expanded for the fifth successive quarter in September 2017; at a rate almost double that of 2016.
Meanwhile, the 3rd edition of the World Bank’s update notes that the service sector bounced back, and the fiscal consolidation is paying off.
Inflation has also declined to 10.3 percent.
According to the World Bank Country Director, Henry Kerali, “The macroeconomic outlook was largely positive based on the 2017 performance.”
The launch of the 3rd Ghana Economic Update was under the theme, “Agriculture as an engine of Growth and Jobs Creation.”
“GDP growth for 2017 is estimated to have almost doubled from 3.7 percent in 2016, and is expected to stay at that elevated level through 2018,” he said.
According to the release, the external position improved as the trade balance has shifted to a surplus. Inflation is likely to fall within or close to the Bank of Ghana’s medium-term target range of 6 to 10 percent in 2018.