Ghana has it all when you consider the resources needed for agriculture and the economics of production. It is also hard to ignore government incentives for large-scale agribusiness and a readily available growing domestic market to sell finished products. This leaves Ghana well placed not just to be self-sufficient in food, but also contribute to the regions and continent’s food supply……
Ghana, formerly the Gold Coast, is located in the sub-region of West Africa of the African continent. It has a population ofapproximately 28 million, spanning a variety of ethnic, linguistic and religious groups. The median age is around 21 years, and about 72% of the population is between 15 to 64 years of age, according to 2013 census projections.
Why Invest in Ghanaian Agribusiness?
Despite lower oil and commodity prices, all the important economic organisations such as IMF and World Bank maintain a bright outlook for Africa and Ghana.
The critical fundamentals in Ghana that remain strong and keep its development from derailing include –
Availability of Resources:
- Abundant agricultural land and water
- Large labour force
- Funding for developing the country
Economics of Resources:
- Superior climate for multiple crops per year
- Property costs are relatively low
- Proximity to local and world market
Demand for Sustainable Food:
- Ghana population to double by 2050
- Ghana imports a significant amount of food
- Food demands outpacing population growth
- Local and worldwide growing demand of food
Government Stability and Support:
- Fastest growing economy in Africa
- Ghana Currency closely tied to US dollar
- Free elections for over two decades
- Ten-year tax holiday for Free Zones Enterprise
- Government and Chieftain support
Ghana’s economy is founded on three sectors namely, agriculture, industry and services.
Agriculture and Ghana’s Economy
Ghana’s economy is founded on three sectors namely, agriculture, industry and services. Its economy is driven by the private sector, which enjoys strong government support as government regards it as the engine of economic growth. This support creates an enabling environment for investment and thus opens the economy for growth. Ghana’s GDP in 2016 stood at 42.6 billion USD, with the agriculture sector contributing approximately 19.7% as illustrated in Figure 1 below.
Figure 1: Composition of Ghanaian GDP
Source: World Bank/USA CIA/Farrelly & Mitchell Analysis
While the agriculture sector feeds the rest of the economy, it is experiencing slow growth. In an attempt to stem the tide of this slow growth in terms of contribution to GDP, the government has instituted a policy of Public Private Partnership (PPP) generally aimed at stimulating investment, especially in the agriculture sector. A notable incentive in the PPP policy includes a five year tax holiday for companies producing cash crops. Further, importers of industrial plant and equipment for agriculture are also exempt from import duties.
The agriculture commodities with the highest production quantities include Cassava, Yams and Plantains. Large-scale businesses are quite intensively involved in the production of rice, maize, sunflower, soybeans including many other crops. The main farm produce contributing to GDP include cereals; starchy crops; livestock including cattle, sheep, goats, pigs and poultry; fisheries including marine, inland and aquaculture; forestry and cocoa.
Ghana Food Deficits: Readily Available Market?
The Ministry of Food and Agriculture in their 2016 annual report indicated a deficit in the production of rice and millet as shown in table 1 below. Therefore, large-scale agribusiness firms are finding it lucrative to invest in Ghana at this strategically important time.
Table 1: Annual Crop Production in Ghana (metric tonnes)
Source: World Bank/USA CIA/Farrelly and Mitchell Analysis
Ghana has approximately 13.6 million hectares of fertile agricultural land for use, of this 7.3 million hectares are under cultivation. To increase the supply of agricultural products to meet domestic demand, the Ghanaian government is incentivising companies in the agriculture sector to go into large-scale mechanised farming. Nonetheless, there are only a few large-scale mechanised companies operating in Ghana.
Ghana is committed to improving physical infrastructure to facilitate business. Moreover, Ghana’s reform programme to improve the investment climate for both local and international investors have made the country the best place for doing business in West Africa, ahead of Nigeria and Cote d’Ivoire. In addition, the 2017 Ease of Doing Business Report ranked Ghana 108th, an improvement from the 111th position in the previous report due to significant strides made in ease of getting electricity, resolving insolvency and trading across borders.
Ghana Investment Promotion Centre (GIPC) was adjudged the Best Investment Promotion Agency (IPA) in West and Central Africa for the second time at the 2017 Annual Investment Meeting (AIM) Awards in Dubai, UAE.
Based on our research and local experience, we believe Ghana has enormous potential for existing companies and new entrants. A rich abundance of fertile land, favourable climate and favourable regulatory environment, make it a desirable location for highly scalable investments in primary agriculture and related downstream activities.