Agric is collapsing - World Bank warns Ghana

The share of Ghana’s agricultural sector towards the country’s Gross Domestic Products (GDP), which in 1991 was about 65 percent, has now reduced by almost 50 percent down to 23 percent in 2012, the World Bank has warned.

The situation has thus engineered a shift in the economic growth of the country, which, in the past, was mainly dependant on agriculture, onto the services sector. “As a result, by 2011, agriculture was the smallest sector in the economy, in terms of value added, although it is still the main sector of employment, representing 43.2 percent of total employment,” the World Bank noted.

This was contained in a World Bank Group publication under the heading; “Poverty Reduction in Ghana …Progress and Challenges.” The sector further saw a steady increase in productivity, and a substantial reduction in the workforce, majority of who joined the services sector, and, to a lesser extent, industry.

According to the World Bank, the production of cocoa and other cash crops was the main driver of the changes mentioned above. Production of the cocoa beans expanded rapidly in Ghana, beginning from the late 1990s, leading to the country becoming the world’s third-largest cocoa producer.

The report said: “Agriculture is dominated by low-productivity smallholder farming and is mainly rain fed. The most competitive cash crop is cocoa beans. Ghana controls an average 14.5 percent of the world market, and is the third-largest largest producer.”

The report, however, elucidated that Ghana’s average yield between 2005 and 2012 – that is 431.0 kilogrammes per hectare – is still low compared with the production of Cote d’Ivoire and Indonesia.

“Meanwhile, the service sector expanded to nearly half of GDP, from an initial 34 percent in 1991.”

According to the World Bank, the growth in the services sector, which accounts for more than half of the country’s capita GDP growth, was categorised into three heterogeneous groups of “other activities”.

“The main driver of the relative growth of the service sector, accounting for 23.9 percent of the total GDP growth, was a heterogeneous group of other activities. This includes financial and business services, public administration, education, health care, social protection and other services.

“This was followed by ‘transport, storage, and communication’ accounting for 18.5 percent of overall GDP growth, and ‘wholesale, retail trade, restaurants and hotels’ accounting for 13.8 percent.”

Explaining that the boom in the services sector could be attributed to a number of factors, the World Bank mentioned high-value added services such as information and communication technology, finance and insurance, as well as real estate.

The growth, which, according to the World Bank, took place mainly in the capital city of Accra, did not only experience huge capital inflow in the last 10 years, but also a surge in real estate prices.

It continued: “The other service component is represented by those activities -borderline between formal and informal- that characterise West Africa towns; retail activities, construction, transport and so on.”

Explaining further, the World Bank observed that the rise in public sector employment in the areas of education, health care and public administration, also, in no small way, contributed to growth in the service sector.