Ghana’s economic and agricultural transformation: Past performance and future prospects

GHANA’S ECONOMIC AND AGRICULTURAL TRANSFORMATION: PAST PERFORMANCE AND FUTURE PROSPECTS

Urbanization in Ghana has spurred growth in non-farm jobs in rural areas with little impact on agricultural intensification, defined by higher land productivity. Simultaneously, neglect of public investments, low even by African standards, in the non-cocoa sector has stagnated agricultural growth in the country. These are some of the key findings of a new book published by International Food Policy Research Institute (IFPRI) and Oxford University Press, launched today.

The book titled, Ghana’s Economic and Agricultural Transformation: Past Performance and Future Prospects, edited by Xinshen Diao, Peter Hazell, Shashidhara Kolavalli, and Danielle Resnick offers key insights into harnessing agriculture’s potential in the country. “Ghana presents an important case study to understand the challenges and opportunities for Africa’s economic transformation,” says IFPRI Senior Research Fellow and book co-editor Danielle Resnick.

Despite over 30 years of continuous growth in per capita income and rapid urbanization, Ghana has not been able to industrialize. Most of its workers are trapped in traditional agriculture or low productivity jobs in the services sector. Using a wide range of primary and secondary data at multiple scales, the book examines Ghana’s overall economic performance since the major Structural Adjustment Program in the mid-1980s and provides an in-depth empirical analysis of the performance of the agricultural sector and broader economy over the past four decades.

The book offers important takeaways with implications for policymakers and practitioners. Among them is the key insight that raising land productivity in agriculture is one of the few options available for helping to transform the national economy and ensuring future growth in per capita incomes.

Also, urbanization has not kick-started agricultural intensification. Urbanization is often hypothesized to induce agricultural intensification as farmers respond to increased demand for their products but face growing competition for their land. However, this has not been the case in Ghana. As rural wages have gone up, people have shifted to more non-farm jobs, adopted labor saving technologies in farming like mechanization and herbicides, and found more land to bring into cultivation. “The result has been a substantial decline in the share of households that depend primarily on agriculture, an increase in agricultural labor productivity, but only a modest increase in land productivity,” says Xinshen Diao, co-editor and Deputy Director of the Development, Strategy and Governance Division at IFPRI.

This pattern of agricultural growth could present problems for the future. “Without investing in agricultural intensification, increased production will depend on further expansion of the cropped area, either by clearing virgin forest or reducing the length of traditional fallow periods,” says another co-editor, Dr. Peter Hazell. “These alternatives for expanding food production are not only environmentally damaging, but they are also reaching their limit – there is simply not much virgin forest land left to convert to cropping and any further reduction of fallow periods will only worsen soil degradation and slow crop yield growth.”

In addition to this lack of intensification, the book finds that public investments outside the cocoa sector have been insufficient. “Public investment plays a crucial role in promoting agricultural growth and shaping distributional outcomes,” says Samuel Benin, a chapter author and Deputy Division Director of IFPRI’s Africa Regional Office. “In Ghana, agricultural subsectors outside of cocoa—including all the country’s food staples—have been neglected.”

As a result, Ghana has been unable to compete with imports like rice, poultry, and processed foods, or to grow additional agricultural exports beyond cocoa. This failure to enhance exports or import substitutes means the country is missing out on creating jobs, boosting national per capita income, absorbing a growing labor force, and enabling more workers to shift out of traditional agriculture.

This lopsided public spending has even broader implications for value chains: The lack of improved seeds, credit, quality control, effective farmer organizations, and public-private partnerships could all be addressed through more proactive government intervention. Former country leader of IFPRI’s Ghana Strategy Support Program and the book’s co-editor, Shashidhara Kolavalli believes that “the experience of Ghana’s Cocoa Board (CocoBOD) indicates that selective interventions could be beneficial to develop many other agricultural value chains.”

“In order for the Ghanaian government and other African countries to harness the transformative potential of agriculture, more effort will be needed to strengthen relationships with business and target scarce resources to selected value chains with the greatest growth and employment potential,” adds Danielle Resnick. Ultimately, the book emphasizes that long-term commitments to transforming the agriculture sector require good governance.

Ghana has been viewed as one of Africa’s political and economic success stories, from maintaining a multi-party democracy, peace, and social cohesion to reducing poverty and growing its middle class. These developments, combined with continuous growth over the past three decades, demonstrates the country’s unique capabilities. However, to ensure adequate and decent jobs for its population in today’s changing global environment, Ghana needs to find opportunities to bolster economic transformation. Targeted investments in agriculture offer one of these opportunities if both public and private actors adjust course accordingly.


This post is based on the IFPRI press-release. Editors and authors of the book gratefully acknowledge sustained funding support for the IFPRI’s Ghana Strategy Support Program provided by USAID (from both the Ghana country mission and the Bureau for Food Security (BFS) in Washington, DC), IFPRI, and the CGIAR Research Program of Policies, Institutions, and Markets (PIM).

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