Agric must lead economic revival — Prof. Bokpin

Professor of Finance and Economics, Godfred Bokpin, says agriculture development must be the foundation on which the next government can return the country’s fragile economy to its former glory.

He said prioritising agriculture would be the surest way to create the needed jobs, ensure food security, drastically lower inflation, improve the country’s exports and provide the raw materials needed to meaningfully drive any industrialisation agenda.

Speaking to the Graphic Business on what the next government can do to revive the economy, Professor Bokpin said the agriculture sector held the key to changing the dynamics because through agribusiness, the entire agriculture value chain will be ignited and linked to agro-processing to deliver the positive outcomes for the economy.

Agriculture must be prioritised because, through the value chain, there will be more jobs created to reduce the unbearable unemployment situation; with agriculture booming, the high inflation rate driven mainly by rising food prices will also be reduced.

We should not also lose sight of the fact that, through agro-processing, we will have the raw materials to fuel our industrialisation drive; we will also be food-sufficient and be able to export to earn some foreign exchange to shore up our local currency. 

Domestic tax revenue

Professor Bokpin further pointed out that much as agriculture contributes an average of about 20 per cent to Gross Domestic Product (GDP), tax contribution from the sector was nothing to write home about. 

Against this background, he justified why strengthening the entire agriculture value chain will help businesses in that space to make it big and contribute more significantly to domestic tax revenue.

PFJ

Government in its quest to transform the agricultural sector launched a special initiative, Planting for Food and Jobs (PFJ) Programme, to transform the sector and 
invariably, the economy.

Since its inception in 2017, the programme has been contributing to the agricultural growth and development of the country. Until phase two of the programme was introduced, PFJ 1.0 has been hailed as a transformative programme for Ghana’s agriculture sector. 

Designed to boost food security, create employment and alleviate poverty, the PFJ provided farmers with subsidised seeds and fertilisers, along with improved agricultural practices.

The PFJ 2.0, which was launched after an assessment of the first, is a five-year plan to attain food and raw material self-sufficiency in the following 10 crops and poultry.

Vegetables – tomato, onion and pepper; Grains – rice, maize, soya and sorghum; Plantain, Roots, and Tubers – cassava and yam; and poultry where the emphasis will be on broiler production.

However, not much has been achieved despite the huge potential of the programme in transforming the economy as targeted.  

Economic snapshot

The call comes at a time when the country is riddled with several economic challenges.

Inflation is currently at 22.1% according to the latest figures from the Ghana Statistical Service, while the local currency continues to hover at an average interbank market rate of GH¢16 to $1.

Unemployment is above 14%, while lending rate is about 28.4% as per the latest Ghana Reference Rate.

Revival

Professor Bokpin said despite the unimpressive economic situation, there is a huge potential for a turnaround and stressed that it can only be possible if agriculture is prioritised.

He said at a time when many households are spending between 40 and 45% of their disposable income on food, the situation can be reversed for people to start saving, a phenomenon which can create an avenue for the government to borrow domestically for long-term projects.

He said agriculture had the potency to address the serious inequalities within the country, reiterating that agro-processing can be linked to the industrialisation drive to bridge that yawning gap.

FDI inflows

Professor Bokpin referenced the country’s unsustainable debt position which culminated in the shutdown of the international capital markets to the country, saying the development had affected the inflow of Foreign Direct Investments (FDIs).

He was, however, hopeful that, through effective leadership, the right signals would be sent to investors to turn to Ghana again to do business.

Professor Bokpin said much as the signals are negative, the onus lies on the leader of the next administration to restore hope and signal strong economic revival efforts through prudent policy implementation.

Domestic macroeconomic front

Much as the economic situation is not the best, there are positive signs of recovery.

For instance, provisional GDP data from the Ghana Statistical Service for the second quarter of 2024 point to a stronger growth outturn than expected. Real GDP grew by 6.9% in the second quarter of 2024, compared with just 2.5% in the corresponding quarter of 2023 and 4.7% in the first quarter of 2024. Non-oil GDP growth was 7.0% compared with 3.1% in the same period of 2023.

The growth outturn is reported to have been largely driven by a strong performance in the industry sector, which grew by 9.3%, having contracted by 2.6% same time last year.

The services and agricultural sectors also grew by 5.8% and 5.4%, respectively.

To signal positive actions to restore investor confidence, Professor Bopkin also added that there was the need for the next government to desist from inflating project costs.

He said projects in Ghana are too expensive when compared to other countries executing the same projects and noted that such developments have dire financial implications for the country. 

Managing transition

Professor Bokpin said managing the transition from one government to the other will also send the right signals to the international business community.

He said the first quarter of next year will be crucial for the country because the transition will play a role in the perceptions formed and how the country will be perceived by investors in particular.

Professor Bokpin, therefore, urged political actors to show leadership and ensure a smooth transition devoid of any disturbances.