Investing in Agriculture in Ghana - 10 Things You Need to Know
Agriculture can rightly be described as the backbone of the Ghanaian economy, with about 52% of the West African nation's labor force employed in the sector. It provides food for both local consumption and cash crops for export, raw materials for various manufacturing industries, both locally and internationally, creates employment, generates income and also earns foreign exchange, to mention just a few.
However, despite the considerable benefits inherent in this sector and the many potentials yet untapped therein, the Ghanian agricultural sector has, over the years, continued to witness a drop in its contribution to the nation's Gross Domestic Product (GDP). This is in comparison to other sectors (emerging sectors) in the economy.
Apparently, it's a clear sign of Dutch Disease, one which portends grave danger to one of Africa's thriving economies. In other to nip this problem in the bud, the Ghanian government has mapped out a lot of incentives to encourage investment in Ghana's agricultural sector. Thus, if you have the ambition of investing in the industry, there's no better time to do so than now. Here're ten things you need to know first.
Ghana's Agricultural Products
The Gold Coast has a total landmass of 238,539 km2, out of which 136,000 km2 representing about 57% of the country's land is classified as agricultural land. This land cuts across the five main agro-ecological zones in Ghana, with each zone known mainly for a couple of farm produce determined by the natural vegetation of the area as influenced by the soil.
Ghana's primary agricultural products are Cocoa, Coffee, Cotton, Oil Palm, Kola, and Rubber. Cereal crops which are staple food crops and always have available local demand include Yam, Sorghum, Millet, Cassava, Cocoyam, Plantain, Maize, etc. For fruits and vegetables, we have Tomato, Okro, Citrus, Pineapple, Pawpaw, Mangoes, Onion, etc. Aside from crop farming, there's also a thriving livestock sub-sector. The livestock population is comprised of Cattle, Goats, Pigs, Sheep, Poultry, Fish, etc. These farm animals are raised in both backyard and commercial animal farms.
Availability of Land
As earlier mentioned, Ghana's agricultural sector has myriad opportunities in it yet unexplored. Though a good number of the populace are involved in farming, many of them are subsistent farmers who produce just enough to have food on their tables. Ultimately, these farmers only cultivate a small portion of Ghana's arable land, leaving a vast expanse of land unused.
It is on record that of Ghana's 13,628,179 hectares of agricultural land, only 7,846,551 hectares are currently cultivated, leaving out the other 5,781,628 hectares as uncultivated land. Still, for the area under cultivation, just about 30,269 hectares of land is under irrigation, and this sadly leaves a good portion of the cultivated land usable only during the rainy season. One vital point to pick out here is that in Ghana, there's an availability of land for all investors who want to invest in the country's agricultural sector. Moreso, with irrigation facilities set up, investors' output will no longer be determined by the seasonal variations in rainfall.
Availability of Trained Manpower
What with the prevailing unemployment rate in Ghana projected to reach 7.60% by the end of 2020, the government, through its National Employment Policy as a way to cushion this staggering figure, advocates employment-intensive production processes which agriculture is one. Originally, more than half of the country's population is already involved in one farming activity or the other. But at best, they operate in the informal sector.
In other to modernize this sector, there's a heavy emphasis on formal training of personnel that will be gainfully employed in the sector. As such, several agricultural training institutions that offer agric-related training have been set up in furtherance of this objective. Some of Ghana's agricultural colleges include Ohawu Agricultural College, Animal Health and Production College, and Kwadaso Agriculture College, which all offer a Diploma in General Agriculture. For polytechnics, we have Ho Polytechnic and Accra Polytechnic, which both offer c HND Agricultural Engineering, while the likes of Kwame Nkrumah University of Science and Technology, University of Cape Coast, University of Ghana, and Central University College offer different degrees related to agriculture.
Agricultural Technology in Ghana
All over the world, opportunities identified in agriculture these days are mostly hinged on problems that technology can solve. In Ghana, innovations in agricultural technology have begun to address many challenges that have, for many years, bedeviled the sector. These innovations are in the areas of improved access to finance/credit, market intelligence data, weather forecast data, and even pension and insurance services to farmers. Companies like Farmerline, Esoko, and AgroCenta as reported by Oxford Business School, are already in the forefront tapping into these opportunities, but we believe there's still room for others.
The report also noted that emerging technologies like artificial intelligence tailored to Ghana's agricultural needs could help inform better decision making on smart crop selection, pest avoidance, curtail post-harvest losses, etc. The Ghanian government is also pushing for deeper penetration of technology into its agricultural sector. The government's Planting for Food and Jobs Programme (PJF) under the Ministry of Food and Agriculture has recorded laudable success. These are by creating and maintaining a database of farmers, incorporating the use of smartphones in extension services, adopting electronic methods for distributing and tracking inputs, and increasing the efficiency of the existing agro e-platform by making them more accessible to farmers.
New Investment Opportunities in Ghana's Agric Sector
Investment in Ghana's agricultural sector these days is not squarely tied to food/cash crop and animal production. Though this has been the norm since antiquity, there has been a paradigm shift with new investment opportunities springing up in various sub-sectors. These are in farming activities like Pre-production: sale or rent of heavy agricultural machinery, consultancy services, etc. Production: irrigation, the supply of fertilizers, agrochemicals, pesticides and herbicides, improved seeds, veterinary medicine and chemicals, animal feeds, tools, etc. Post-production: processing of farm products, packaging, storage, marketing, and distribution.
Seeing the achievements already recorded by the few agro-tech companies driving innovation and growth in Ghana's e-agric sub-sector, it's apparent that investing in ancillary services in the agricultural industry is a vast goldmine. Moreso, there are lots of favorable government policies, and when you build your well-thought business around them, you're sure to break even in the near future.
Government Agricultural Policies
Like many other African countries and indeed countries all over the world, the government of Ghana has been showing increased commitment to boast its domestic agricultural production. This is evident in various policies already mapped out to encourage investment at all levels in the sector. These incentives range from tax holidays to newly set up agro-processing companies to income tax exemption for farmers, tariff incentives on agro machinery import, etc.
For example, companies set up to convert raw crops, fish, or livestock into canned or packaged edible products are entitled to three years of tax holiday from the day they started commercial production. Companies producing by-products from cocoa waste enjoy five years tax holiday while companies involved in the processing and conversion of other waste products into useful commodities enjoy seven years of tax holiday from their first day of commercial production. In the same vein, there's zero import duty levied on imported agricultural tools and pieces of machinery, while importers of smaller agro-inputs are entitled to tariff incentives.
Agricultural Credit Facilities
The availability of finance is one vital criterion that every investor in agriculture has to consider. It is not just enough to have these credit facilities existing on paper, but it should also be accessible in reality with its terms tailored to the specific needs of farmers. Good enough, there're lots of finance schemes already set up in Ghana to assist farmers no matter what their credit demand will be.
From business advisory services to soft loans, grants and matching grants are all in existence to extend agricultural credit facilities to farmers. These credits facilities are made available to farmers in various schemes such as the Out-grower and Value Chain Fund (OVCF), Rural Enterprise Development Fund and Matching Grant Fund, and the GCAP matching grants. Other financial institutions that provide credit facilities to stakeholders in this sector include EXIM Guaranty Company Limited, Ghana Agriculture Insurance Pool (GAIP), etc. And Of course, there's also the Agricultural Development Bank of Ghana, which is by far the largest financial institution in agricultural financing in Ghana.
Availability of Agricultural Infrastructures
Warehousing facilities and transportation infrastructure are ancillaries in this sector, without which the industry can't function efficiently. The government of Ghana has continued to invest in these areas, and these investments are managed by capable bodies who though they work independently of each other, understand they play vital roles in adding value to Ghana's agricultural products.
For example, the Air Ghana Perishable Cargo Center (APCC) manages the Millennium Development Authority (MiDA) funded 1200 meters square perishable cargo center at the Kotoka International Airport. The Ghana Grains Council (GGC) oversees the management of some warehouses located in various parts of the country.
In terms of land transportation, the government of Ghana has since time immemorial undertaken projects geared at increasing road networks to farming communities. Regarding aviation, Ghana has one of the best international airports in Africa, which is the Kotoka International Airport (KIA) in Accra. And as earlier mentioned, it has a perishable goods center that provides handling and temporary storage for perishable produce meant for export. With regards to Ghana's seaports and water transportation, the country has two main seaports located in Tema and Takoradi. Programs such as the Container Terminal Project have is being implemented to upgrade these existing ports to international standards.
Ready Access to Local and International Markets
Ghana's steadily increasing population requires that there's an urgent need for increased food production in the West African nation. It's projected that by the end of 2020, the country's population will have reached 31.07 million (all things being equal). With this projection, there will be more mouths to feed, which guarantees a ready domestic market for farm products.
On the other hand, Ghana, by virtue of its geographical location on the African continent, enjoys proximity to the US and European agro commodity markets. For example, the flight time from Ghana to Europe is about 9 hours, while from Ghana to the US is about 6 hours. This short duration of time farm produce has to be on transit ensures that they arrive there target market fresh for consumption or processing, albeit they might have stayed for days in storage.
Security of Lives and Properties
Indeed, the safety of lives and properties is one vital consideration to have in mind before embarking on any investment project. However, Ghana's many years of political stability has almost relegated this consideration to the background. Famous world leaders like former UK Prime Minister Gordon Brown and former US President Barack Obama have all commended the political stability in the country. Something many other African countries should emulate.
For foreigners considering to invest in the country, the government of Ghana allows 100% foreign ownership of investments made by foreigners in Ghana. Agriculture as a backbone of Ghana's economy is not excluded in this government largesse. This benevolence of Ghana's government also go in line with the warm and friendly Ghanian people who are always welcoming of foreigners. Ghana is acknowledged all over the world for its exceptional hospitality to investors or even people just visiting the country for vacation.
There's also an improving health and safety standards all over the country with a lot of emphasis being made on the need to have better working environment. This has no doubt continued to improve people's standard of living within the country. As a result of this, there has been a noticeable increase in demand and preference for various imported agricultural products among the working class. Thus, an investment in Ghana's agricultural sector where farm produced are processed to meet international standards will have a ready market both at home and abroad.