Download Structure of the Ghanaian Economy

Structure of the Ghanaian Economy
The Ghanaian economy is made up of three main
sectors namely:
The Agricultural Sector
The Industrial Sector
The Services Sector
The Agricultural Sector
Structure of the Agricultural Sector
• Ghana covers an area of approximately
239 million square kilometres. Abt 57% of
the country’s land (i.e. 136 million
hectares) is suitable for agric purposes.
• However, only abt 53million hectares
representing abt 38.9% of the total agric
land was under cultivation as at the 2007.
Structure Cont.
• Agricultural activities in country are influenced by
agro-ecological conditions which divide the nation
into three major zones namely;
the coastal savannah,
the equatorial rain forest, and
the northern savannah.
• The conditions in these ecological zones determine
the types of crops that can be cultivated.
Agricultural crops include yams, grains, oil palms,
cocoa etc
Structure Cont.
The agricultural sector is divided into five sub-sectors
namely;
• The cocoa sub-sector –this sector consist of the prodn
of cocoa beans, paste and butter.
• Crops − this sector consist of all other crops apart from
cocoa i.e. starchy stable, pulses and nuts, vegetables,
cereals etc.
• livestock−livestock such as poultry, goats, sheep, cattle
etc.
• Forestry and logging−covers all activities associated
with the prodn of timber logs and sawn timber.
• Fisheries− this sector include the prodn of fish and fish
products such as tuna, tilapia etc
Nature of the Agriculture in Ghana
Broadly speaking, there are two types
of agriculture in Ghana namely
• the subsistent, small scale traditional
system of agric and
• the mechanized, large scale system.
Characteristics of Agriculture in Ghana
• Heavy dependence on rainfall. Irrigation farming is
very minimal. E.g. the total agric land cultivated
under irrigation was estimated at 10,500 million
hectares in 1994
• Use of low level of technology i.e. the use of cutlass
and hoes, highly labour intensive
• It is dominated by small-scale prodn enterprises.
Data show that abt 80% of food crop farms were
cultivated by subsistence farmers
Characteristics Cont.
• Predominant use of traditional farming
methods−scarce use of fertilizers,
pesticides etc. slash and burn system,
shifting cultivation, and mixed cropping
etc.
• The use of institutional credit i.e. loans
from financial institutions is very low
Role of Agricultural Sector
• In the past agriculture was the major contributor to
GDP. In the 1970s and 1980s, its contribution to
GDP averaged over 55%. But this progressively
reduced to 41% in 1995 and 38% in 2007. However,
after the rebasing the sector cannot be termed as
the major contributor to GDP.
• It contributes significantly to foreign exchange
earnings for the country. This is achieved in two
ways via exports of agric products and producing
import substituted food and raw materials. In 2010,
foreign exchange earnings from the sector were
US$ 2,639 million.
Role Cont.
• The sector is a major source of govt revenue via duties paid
on exports on agric products particularly cocoa. The
contribution of the sector has decline steadily from abt
26% in 1987 to an average of abt 20% in the first half of the
1990s.
• The sector is the main source of food supply for the large
non-agricultural and mainly urban population.
• The sector produces raw materials for agro-based
industries
• The sector offer job opportunity to the highest proportion
of the economically active population mainly as farmers,
farm labourers etc.
• It provides substantial mkt for industrial and services
sectors outputs.
Challenges and Constraints
• Low level of productivity. This can be attributed to
poor farming practices and poor land preparation and
weed management
• Low level of technology
• Population growth
• Land tenure system
• Inadequate extension services
• Low level of education
• Inadequate credit
• High post-harvest losses
• Poor infrastructure in the farming areas (e.g. poor
roads, poor marketing etc )
Significance Interventions/Policies in
the Agricultural Sector
• A major feature of agricultural policy in
the early 1970 was the formation of
single product devt board for cotton,
fabric, grains, cattle, and meat.
• They were set up to offer advice,
provide incentives and to oversee the
prodn of the agricultural raw materials.
Interventions Cont.
Other policies during this period included:
• Institution of minimum guaranteed price schemes.
• Massive rural devt schemes designed to provide
basic infrastructure such roads, water, and
electricity to curb rural-urban migration.
• In the cocoa subsector, the multiple buying systems
were est. to replace the monopoly enjoyed by the
United Ghana Farmers’ Cooperative Council which
was subsequently dissolved.
Interventions Cont.
• However, a monopoly system of cocoa
purchasing (unitary buying system) was
reintroduced in the 1977 during the
Acheampong era.
• There was an upsurge of interest in
raising agric prodn to self-sufficiency
level. This led to the Operation Feed
Yourself (OFY) and Operation Feed Your
Industries (OFYI) programmes.
Interventions Cont.
• Agricultural devt b/w 1976-1982 took place in an
unfavourable macroeconomic and political
environment characterised by a rapid expansion of
money supply, high inflation rate, and BOP deficits.
• Smuggling operation was a commonplace.
• Agricultural mechanization suffered as basic spare
parts required to maintain machines were lacking.
• To compound the economic problem, the period
saw frequent changes in govt (May, 1978 Afrifa,
June 4 1979 AFRC, and Dec 1981 PNDC).
Interventions Con’t
• As the largest sector, agric received a lot of
attention in all phases of the ERP and SAP.
• The main feature of agric policy was the
increase in producer prices with particularly
sharp increases for cocoa relative to other
crops.
• The Agricultural Services Rehabilitation
Project (ASRP) aimed at rehabilitation of agric
services was implemented.
Interventions Cont.
Other special programmes included:
• Natural Agricultural Research Programme aimed at
rehabilitating and reinforcing agricultural research systems.
• Rural agricultural finance scheme aimed at addressing the
credit needs of farming community and expending prodn
capacity and empt in the rural areas and strengthening credit
institutions operating in the rural areas.
• The International Fund for Agricultural Devt (IFAD) sponsored
scheme to help smallholders in the savannah and transitional
areas of the country.
• USAID sponsored Agricultural Productivity Promotion (APP)
aimed at improving productivity among food crop farmers via
maintenance of feeder roads leading to these areas.
Interventions Cont.
• Agricultural policy in the rural phase of adjustment
was implemented within the context of the medium
term devt programme (MTDP-1991-2000).
• As part of the liberalisation programme, the
guaranteed minimum prices for maize and rice were
abolished and all subsidises were removed.
• Also, the procurement and distribution of agric
inputs (hitherto done by MOFA and COCOBOD)
were privatized in order to enhance competition
and efficiency in the marketing of agricultural
inputs.
Interventions Cont.
• The Agricultural Sector Investment Project (ASIP) is
another World Bank sponsored project (1994-1998).
MOFA through this project sought to provide:
Financial support to producer associations and their support
organs such as local authorities
Technical support to these groups by way of the devt and
design of their identified project need, and their
implementation and
Skills training on effective management of projects to these
same groups.
• Projects eligible for ASIP support included the
construction of new and rehabilitation of existing water
resources for agric use, market sites, access roads into
high food producing areas and villages and farm level
arable produce storage and processing units.
Interventions Cont.
• The Agricultural Sector Support Investment
Project (ASSIP) was a govt initiative meant to
move agric sector growth to higher level.
• It was set up as the main instrument for
implementing a Accelerated Agricultural Devt
Strategy (AADS) that was itself formulated to
enabled Ghana achieve the status of a
prosperous middle income country by the
year 2020.
Interventions Cont.
• In 2002, another major intervention that is Food
and Agricultural Sector Devt Project (FASDEP) was
developed.
• FASDEP was necessary because of the urgent need
to modernise the agric sector with the aim of
turning Ghana into a leading agro-industrial country
in Africa by the year 2020.
• FASDEP sought to bring out the linkages among
various subsectors in agric and other nonagricultural sectors.
Policy Initiatives and Implementation
2010
 Buffer Stock Management− The establishment of the
National Food Buffer Stock Company. Acquisition and
rehabilitation of two warehouses for the storage of grains.
Also, abt 6,949 metrics tonnes of paddy rice and 416 metric
tonnes of maize were purchased and stored.
 Fertiliser Subsidy Programme− To increase productivity, the
govt subsidised 60,000 metrics tonnes of fertiliser at an
average cost of GH 16.00 per bag.
Policy Initiatives 2010 Cont.
 Livestock and Fisheries Development− Livestock farmers in the three Northern
Regions, Brong-Ahafo, Ashanti and Volta Regions were supplied with 2,584
livestock of various improved species. Also, 35,000 cockerels were distributed to
1,750 farmers in 25 districts. Construction of cold store at Nyanyanor, Kromantsi,
Apam, Half Assin, New Takoradi, Shame and Sekondi. Abt 11.07 hectares of pond
and 192 cages were constructed to promote and develop aquaculture and cage
culture.
 Agricultural Mechanisation− 84 service centres were operationalized by
September, 2010 as against 69 in 2009. Purchase of pro-cocoon to store 30,000
metrics tonnes of grains.
 Youth in Agriculture− Under the Block Farm Programme, abt 47,000 hectares of
land were cultivated with maize, rice, sorghum, soybean and vegetables. 80,000
benefited financially.
Future Outlook/the Way Forward
• We expect to see a shift from extensive agric
to intensive agric where increases in
productivity would be the result of increasing
yield per area cultivated rather than an
increase in the acreage of land.
• We expect to witness a shift from rain-fed
agric to irrigated agric. In particular, the
harvesting of water in valley bottoms and the
construction of dams in the savannah region
for irrigation purposes.
Future Outlook Cont.
• There should be intensification of agric extension in
support of improved and scientific farming practices of the
small-scale farmers. An effective shift would require
adequate and timely supply of modern inputs, availability
of credit etc
• There should be a shift from small-scale to medium and
large-scale farming. This should emerge if educated and
other people with relatively high opportunity costs are
attracted into farming.
• Attention should be paid to research and devt of farming
techniques that are unique to our kind of climate. Research
institutions should develop post harvest handling and
storage techniques to reduce losses.